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# Bond Valuation

### Valuation of Bonds: price today, present value, yield

1. What is the price today of a 2-year 9% coupon bond that has a par value of \$1,000 and a required rate of return of 9%? 2. You have invested in a bond that pays semiannual coupon payments of \$40 and has a par value of \$1,000. The bond matures in 1 year, and its required rate of return is 10% compounded semiannually. Determi

### Coupon rate for a bond ,..

When I looked up a bond, it was listed, with errors in the coupon rate, as &@*'s of 21, and the market price was listed as \$1025.17. The market interest rate of the bond is 7.2 percent annually. What is the coupon rate?

### Financial Securities valuation - Bond Stock Valuation

Hi, I have questions for 2 problems , can somebody please help ? thanks Problem 1. Your uncle is interested in buying a certain stock, which he says is undervalued and should be worth \$35 per share. He has asked for your help. The stock's dividend, currently at \$1.10, is expected to increase at a rate of 5% per year forev

### Zero coupon bond: what is initial price using PV, when market interest rate change?

A 15 year, \$1,000 par value zero-coupon rate bond is to be issued to yield 10%. a. What should be the initial price of the bond? (Take the present value of \$1,000 to be received after 15 years at 10 %, using Appendix B at the back of the text.) b. If immediately upon issue, interest rates dropped to 8 %, what would be the va

### Basic Bond Valuation

COmplex Systems has an outstanding issue of \$1000 par-value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date. a) if bonds of similar-risk are currently earning a 10% rate of return, how much should COmplex Systems bond sell for today? b) describe two poss

### Akella Corp discount bond: calculate current value

The Akella Corp. has issued a 10-year pure discount bond with a face value of \$1,000 and an indicated interest rate of 11%. Calculate the bond's current value.

### Salem Co Bond Yield to Maturity

The Salem Co. bond currently sells for \$955, has a 12% coupon interest rate and \$1,000 par value, pays interest annually, and has 20 years to maturity. Calculate the yield to maturity YTM

### Corporate Bond Analysis and Valuation

Please see the attached file(s). Corporate Bond Analysis and Valuation Jill Dougherty was hired as an investment analyst by A.M. Smith Inc. for the Cincinnati, Ohio office based on her sound academic credentials, which included an MBA from a top ranking university and a CFA designation. At the time for her recruitment sh

### Stocks and Bonds: Risk premium, Bond Valuation, expected return

Need assistance with the following questions please in excel with detailed explanations. 1. Suppose the market can be described by the following three sources of systematic risk with associated risk premiums. Factor Risk Premium Industrial production (I) 7% Interest rates ( R) 3 Consumer confidence ( C) 5 T

### Bonds: Determining the Value

Please help with the following problem: You purchased a \$1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that point?

### Impact of a company's bond rating on cost of capital? Interest rates vs bond prices.

What impact does a company's bond rating have on its cost of capital? What is the relationship between interest rates and bond prices?

### Calculate the Inflation Premium (IP) on 5-year bonds

Crockett Corporation has a 5-year bond yield of 6.85%, and 5-year T-bond yield 4.75%. The real risk-free rate is r* = 2.80%, the default risk premium for the company's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on the company's bonds is LP = 1.25%, and the maturity risk premium for all bonds is found wi

### Swift Company: what is the nominal yield to call

Swift Company has a bond outstanding with 15 years to maturity, an 8.75% coupon paid semiannually, and a \$1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of \$1,050. What is the bond's nominal yield to call?

### Bonds

You are considering purchasing a bond at the end of this year. The bond has a coupon rate of 10.5 percent, interest payments are made annually and the bond matures in 20 years. If your required pretax rate of return is 14 percent, what is the maximum price you would be willing to pay for a 20-year, 10.5 percent bond? Assume t

### Real Rate of Return Earned on Investments

Last year, I earned 8.7 percent on my investments while U.S. Treasury bills yielded 4.3 percent and the inflation rate was 4.6 percent. What real rate of return did I earn on my investments last year?

### Calculate after tax cost of debt for Heuser Company

The Heuser Company's currently outstanding bonds have a 10 percent coupon and a 12 percent yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35 percent, what is Heuser's after-tax cost of debt (please show all calculations)?

### Bond Calculations: market price, yield to maturity, expected return, required ROR

11. Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of \$1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? 12. Ezzel

### Bonds: Brown Enterprises bond current yield; Sharmberry current price

2 questions 1. Brown enterprises bonds currently sell for 1025.00 They have a 9-year maturity, an annual coupon or 80.00 and a par value of 1,000 what is their current yield A. 7.8 B. 7.9 C. 9.0 D. 9.1 E. 9.2 2. Sharmberry Venutes recently issued bonds that mature in 15 years. They have a par value of 1,000

### Calculate market price of bonds

Company's bonds mature in ten years, have a par value of 1,000 and an annual coupon payment of \$80 the market interest rate for bonds is 9%. What is the price of these bonds? A. 935.82 B.941.51 C. 958.15 D. 964.41 E. 979.53

### Carpetto Technologies: cost of equity using several approaches

9-8 The earnings, dividends, and stock price of Carpetto Technologies Inc. are expected to grow at 7% per year in the future. Carpetto's common stock sells for \$23 per share, its last dividend was \$2.00 and the company pays a dividend of \$2.14 at the end of the current year. a) Using the discounted cash flow approach what is

### Cost of equity capital

David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity. The yield to maturity on the company's outstanding bonds is 9 percent, and the company's tax rate is 40 percent. Ortiz's CFO has calculated the company's WACC as 9.96 percent. What is the company's cost of equity capital?

### After tax cost of debt for Heuser Company

9-5 The Heuser Company's currently outstanding 10% coupon bonds have a yield to maturity of 12%. Heuser believes it could issue a par new bonds that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is the Heuser's after tax cost of debt?

### Bond Valuation comparison of a 1 year and a 15 year bond.

An investor has two bonds in his portfolio that both have a face value of \$1,000 and pay a 10% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year. A. What will the value of each bond be if the going interest rate is 5%, 8%, and 12%. Assume that there is only one more interest payment to be made on Bon

### Yield to maturity, current yield capital gain & yield to call

A 10 year, 12% semiannual coupon bond, with a par value of \$1000, may be called in 4 years at a call price of \$1060. The bond sells for \$1100. (Assume that the bond has just been issued.) a) What is the bonds yield to maturity? b) What is the bonds current yield? c) What is the bonds capital gain or loss yield? d) What is

### Heymann Company's Bonds: Yield to Maturity

6-7 The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a \$1000 par value; and the coupon interest rate is 9%. a) What is the yield to maturity at a current market price of (1) \$829 or (2) \$1104? b) Would you pay \$829 for one of these bonds if you thought that the appropri

### Determining Price of Bonds for Nungesser Corporation

Nungesser Corporation has issued bonds that have a 9% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of \$1,000 and a yield to maturity of 8.5%. What is the price of the bonds?

### Bonds: current yield, yield to call, price

1. A newly-issued corporate bond has 20 years to maturity. The bond has a coupon rate of 8 percent and pays interest semiannually. Also, the bond is callable in 6 years at a call price equal to 115 percent of par value. The par value of the bonds is \$1,000. The yield to maturity is 7 percent. a. What is the bon

### Theoretical market value using semiannual analysis: Pacific Western Corporation

Pacific Western Corporation pays an 11 percent coupon rate on debentures that are due in 20 years. The current yield to maturity on bonds of similar risk is 8 percent. The bonds are currently callable at \$1,060. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Fin

### Bond valuation question

McDonalds Corporation has 8 percent coupon bonds on the market with 9 years left to maturity. The bonds make annual payment. If the bond currently sells for \$910.85, what is the yield to maturity? Is the bond selling at a discount or premium?

### After Tax Yield of Bond: An investor recently purchased a corporate bond which yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond's after tax yield?

An investor recently purchased a corporate bond which yields 9%. The investor is in the 36% combined federal and state tax bracket. What is the bond's after tax yield?