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# Bond Valuation

### Price of a Bond: Bond Valuation for Complex Systems

Complex Systems has an outstanding issue of \$1,000-par value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years reamining to its maturity date. a. If bond of similar risk are currently earning a 10% rate of return, how much should the Complex Systems bond sell for today? b. Describe th

### Solve: Default Risk Premium on a Corporate Bond

Question: A treasury bond that matures in ten years has a yield of 6 percent. A 10 year corporate bond has a yield of 8 percent. Assume that the liquidity premium on the corporate bond is .5 percent. What is the default risk premium on the corporate bond?

### Current Yield, Yield to Maturity & Effective Annual Yield

The 7 percent coupon bonds of Firm X are selling for 102 percent of par value. The bonds mature in 6 years and pay interest semiannually. What is the current yield, yield to maturity and effective annual yield? 1. 6.86; 6.59; 6.70 2. 6.86; 6.23; 6.53 3. 6.37; 6.23; 6.53 4. 6.37; 6.59; 6.86 5. 6.59; 6.65;

### Current & Effective Yield of a Bond

What is the current and effective annual yield for the following? A bond with a yield to maturity of 7.12 percent, a 6.5 percent coupon rate, a face value of \$1,000, a market price of \$961.85, and semiannual interest payments.

### Implied Treasury bond rate

Looking at the Wall Street Journal you observe that the settlement price on a hypothetical 15-year, semiannual payment, 6% coupon bond is 109 9-32. If the bond has a \$1,000 par value, what is the implied Treasury bond rate? 5.11% 5.55% 5.91% 6.35% 6.79%

### FINANCE calculations: NPV, ROE, MRP, CAPM, WACC, IRR, Beta and others

Please see attach document. 1. The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to _________. (Points: 10) maximize its expected total corporate income maximize its expected EPS minimize the chances of losses maximize the stock price per

### Bonds and Stocks in a Market

Bond No. Maturity Coupon Price Yield to Maturity 1 2 years \$50 \$992 ? 2 3 years \$45 ? 5.52% 3 4 years \$60 \$1,015 ? 4 6 years \$54 ? 5.82% (a) Compute the yi

### Methods of Retiring Bonds

What are methods that a company may use to retire its bonds?

### Interest payments a bondholder

Face Value of \$1000 bond has a coupon rate of 8% with 9 years until maturity and sells at a yield to maturity of 9%. What interest payments do Bondholders receive each year and at what price does the bond sell (assume annual interest payments)? If I'm able to calculate the total present value of interest payments how do I get

### Present value or price of bond

I have a \$1000 bond which matures in 10 years with current market interest rate of 8%.If I know that the bond pays \$30 every six months, then how can I find out what the yield to maturity is, expressed on a semiannual basis. I need the yield to maturity rate in order to calculate the present value of interest payments and the p

### Yield to maturity calculations for bond

Consider this: Zero coupon money multiplier notes of 2008. Bonds were issued on July 1,1990 for \$100. Interest is paid every July 1 and the bond matures on July 1, 2008. Determine the yield to maturity if the bonds are purchased at the: a. issue price in 1990 b. Market price as of July 1, 2004, of \$750 c. Explain why th

### Calculating returns for stock and bonds - Set of 14 problems:

Please show all work and complete in excel. Problem Set #1 Calculating Returns: 1. a) Assume you bought 1000 shares of stock at an initial price of \$25 per share. The stock paid a dividend of \$0.50 per share during the following year, and the share price at the end of the year when you sold it, was \$35. Compute y

### Valuation of a Stock and Bond

With that in mind, you decide to put an Excel spreadsheet together that values the firm's stock and bonds. The company's stock trades for US\$35 per share, with an annual dividend payment of US\$1.50, expected to grow to US\$1.58 next year. The required return on stocks is 10%, and the dividend is expected to increase by 6% for the

### Three Theories used to Describe the Shape of the Yield Curve

Compare and contrast the three theories used to describe the shape of the yield curve. Explain how each theory might impact interest rates.

### Coupon rate, coupon yield, and yield to maturity

A firm issues a bond at par value. Shortly thereafter, interest rates fall. If you calculated the coupon rate, coupon yield, and yield to maturity for this bond after the decline in interest rates, which of the three value would be highest and which would be lowest? Explain

### Derivatives-practice problems with index and interest rate futures

1. A portfolio manager controls \$5 million in common stocks. In anticipation of a stock market decline, the manager decides to hedge the portfolio using S&P 500 futures contract. The portfolio beta is 1.20, and the current value of the S&P 500 futures contract selected is 1438.50. a) Calculate the number of futures contracts

### Stocks and Bonds

How do stocks and bonds differ? What are the key differences between them with respect to ownership rights, claims on income and assets, maturity, risks, and tax treatment? Why might an organization choose one versus the other as a long-term financing instrument?

### Dividend Valuation Model and Wealth Maximization

4) Dividends, Retained Earnings, and Yield - Springsteen Music Company earned \$820 million last year and paid out 20 percent of earnings in dividends. a) By how much did the company's retained earnings increase? b) With 100 million shares outstanding and a stock price of \$50, what was the dividend yield? (Hint: First compute

### Bond Valuation Questions

1. Bond valuation Callaghan Motors' bonds have 10 years remaining to maturity. Interest is paid annually; they have a \$1,000 par value; the coupon interest rate is 8 percent; and the yield to maturity is 9 percent. What is the bond's current market price? 2. Current yield and yield to maturity A bond has a \$1,000 par value,

### Risk and Return and Stock Valuation

Please assist me with this problem: Go to Yahoo! Finance at http://finance.yahoo.com/ and look up the stock information for a publicly traded company of your using. If you already know your publicly traded company's stock symbol, all you have to do is enter the letters in the "Get Quotes" field near the top of the page and th

### Bond Valuation

You are evaluating two different \$1,000 maturity corporate bonds to buy. The ABC Company bond has a 7 percent annual coupon with 7 years remaining while the XYZ Company bond has a 10 percent annual coupon with 5 years remaining. You could also buy a newly issued 10-year bond from Widget Company of America that has a 12 percent c

### Price of bond

Burns Fire and Casualty Company has \$1,000 par value bonds outstanding at 11 percent interest. The bonds will mature in 20 years. Compute t he current price of the bonds if the present yield to maturity is: a. 6 percent. b. 8 percent. c. 12 percent.

### Price of bond

Bonds mature in 10 yrs, par value of 1,000, annual coupon payment of \$80, interest rate for bonds is 9%. What is price of bonds?

### Npminal yield to call

Outstanding bond with 12 yrs to maturity, 9% coupon paid semiannually, 1,000 par value, bond has 7% nominal yield to maturity, but it can be called in 3 yrs at a price of 1,045. What is bond's nominal yield to call?

### Implied annual yield, Forward rate

A Treasury bond futures contract has a settlement price of 89-8. What is the implied annual yield? Suppose that 1 Swiss franc could be purchased in the foreign exchange market for 60 U.S. cents today. If the franc depreciated 10% tomorrow against the dollar, how many francs would a dollar buy tomorrow?

### Bond Prices and Returns

One bond has a coupon rate of 8 percent, another a coupon rate of 12 percent. Both bonds have 10-year maturities and sell at a yield to maturity of 10 percent. If their yields to maturity next year are still 10 percent, what is the rate of return on each bond? (Show your work proving your answers). Does the higher coupon

### Risk Analysis in Investments

1) Graph and explain the risk profile for the following: Risk Expected Return 0.10 0.07 0.14 0.10 0.20 0.15 0.30 0.25 2) Given the following two investment options, explain what an investor would choose and why: Investment 1, an investmen

### Bonds And Shares Valuation

Please find the attached file for the problem. Many thanks in advance ? Anna Hegg has been considering investing in the bonds of Atilier Industries. The bonds were issued 5 years ago at their \$1000 par value and have exactly 25 years remaining until they mature. They have an 8% coupon interest rate, are convertible into 50 s

### Calculating Yield to Maturity and Current Yield

4. Bond Pricing. A 6-year Circular File bond pays interest of \$80 annually and sells for \$950. What are its coupon rate, current yield, and yield to maturity? 5. Bond Pricing. If Circular File (see question 4) wants to issue a new 6-year bond at face value, what coupon rate must the bond offer? 6. Bond Yields. A bond has 1

### Bond Amortization for Bishop Company

On January 1, 2006, Bishop Company issued 11% bonds dated January 1, 2006, with a face amount of \$10 million. The bonds mature in 2015 (10 years). For bonds of similar risk and maturity, the market yield is 13%. Interest is paid semiannually on June 30 and December 31. (1.) Determine the price of the bonds at January 1,