A bond has a $1,000 par value, 10 years to maturity, a 7 percent annual coupon, and sells for $985. a. What is its current yield? b. What is its yield to maturity (YTM)? c. Assume that the yield to maturity remains constant for the next 3 years. What will the price be 3 years from today?
A bond that matures in 17 years sells for $932. the bond has maturity value of $1,000 and a yield to maturity of 6.17%. interest on the bond is paid semiannually. What's the bond's current yield?
I bought a bond that matures in 7 years. The bond has a par value of $1,000 and a 6.3% annual coupon. The bond current yield is 9.04%. How do you get the bond yield to maturity?
Interest rate premiums A 5-year Treasury bond has a 5.2 percent yield. A 10-year Treasury bond yields 6.4 percent, and a 10-year corporate bond yields 8.4 percent. The market expects that inflation will average 2.5 percent over the next 10 years (IP10 2.5%). Assume that there is no maturity risk premium (MRP 0), and that
The Perry Corporation is setting its terms on a new issue with warrants. The bonds have a 30-year maturity and semiannual coupon. Each bond will have 20 warrants attached which give the holder the right to purchase one share of Random stock per warrant. Random's investment banker estimates that each warrant has a value of $14.
Question 1 A bond with a coupon rate of 7.2%, matuing in 10 years at a value of $1000 and a current market price of $800, will have a yield to maturity (using the approximation formula) of between ______% and ______%. a. 10; 10.5 b. 10.5; 11 c. 11; 11.5 d. 11.5; 12 Question 7 Which of the foll
Suppose the Schoof Company has this book value balance sheet: Current Assets: $30 million Fixed Assets: $50 million Total Assets: $80 million Current Liabilities: $10 million Long-Term Debt: $30 million Common Equity: Common Stock (1 million shares): $1 million Retained Earnings: $39 million Total claims: $
1. A bond with a face value of $1000 has a current yield of 7% and a coupon rate of 8%. What is the bond's price? 2. A Corporate bond carries a coupon rate of 8%, has 9 years to maturity, and sells at a yield to maturity of 7%. A) What interest payments do bondholders receive each year? B) At what price does the bond sell,
Present Values/Future Values/Interest Rate Calculations. See attached file for full problem description. Prepare a response to the following assignments from the text Fundamentals of Corporate Finance (Brealey): a. Chapter 4: Quiz Questions 1, 2, 6 1. Present Values. Compute the present value of a $100 cash flow fo
On Feb 15, 2007 you invest 1mm and on August 15th 2008 you receive 1.1 mm. 1. What is your return assuming the investment compounds annually? Semiannually? 2. A bond is priced at 101 7/8. What is the price in dollars?
On January 9, 2007 you buy an 8% US Treasury that matures on April 15 2012 for a price of 922.50. calculate the - accrued interest - total cost of acquiring bond - coupon yield - YTM
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? A. $891.00
Several years ago, Castles in the Sand, Inc., issued bonds at face value at a yield to maturity of 7 percent. Now, with 8 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 15 percent. What has happened to the price of the bond? Suppose that
Stowers Research issues bonds dated January 1, 2005, that pay interest semiannually on June 30 and December 31. The bonds have a $20,000 par value, an annual contract rate of 10%, and mature in 10 years. Required for each of the following three separate situations, (a) determine the bonds' issue price on January 1, 2005, and
Assume the US economy experienced deflation during the year and that the consumer price index decreased by 1% in the first six months of the year and by 2% during the second six months of the year. If an investor had purchased inflation-indexed Treasury bonds with a par value of $10,000 and a coupon rate of 5%, how much would
You are considering the purchase of a bond with a semiannual coupon of $40, ten years to maturity, a face value of $1,000, and a current market price of $1,000. a. At what price will the bond sell in the market in 6 months, immediately after the first coupon payment, if the stated annual yield on the bond (in six mos.) is 4%?
Question One: Bond Returns. You buy an 8 percent coupon, 20-year maturity bond when its yield to maturity is 9 percent. A year later, the yield to maturity is 10 percent. What is your rate of return over the year? Question Two: Rate of Return. A bond that pays coupons annually is issued with a coupon rate of 4 percent, matur
On Jan 1, the Cheng Corp purchased $10,000 of 5%, five-year bonds as a long term investment. Interest is paid annually. The company is not involved in active trading of securities. A. Record the purchase of the bonds for $10,000. B. Record the receipt of the first interest payment on the bonds in part A. C. Assuming the com
Use the code letters listed below (a - l) to indicate, for each balance sheet item (1 - 13) listed below the usual valuation reported on the balance sheet. 1. Common stock 2. Prepaid expenses 3. Natural resources 4. Property, plant, and equipment 5. Trade accounts receivable 6. Copyrights 7. Merchandise invento
1) A six-month $10,000 Treasury bill is selling for $9,844. What is the annual yield according to the discount method? Does this yield understate or over-state the true annual yield? Explain 2) What is the current taxable equivalent yield for an individual in the 35% federal income tax bracket for intermediate bonds (10 or
Please help with journalizing the entry to amortize bond premium, interest payment and redemption of bonds. See the attached file.
Suppose that 5-year government bonds are selling on a yield of 4 percent. Value a 5-year bond with a 6 percent coupon. Start by assuming that the bond makes annual coupon payments. Then rework your answer assuming that the same bond pays semiannual coupons and the yield refers to a semiannually compounded rate.
1) You owe the following $1,000 bonds: Bond A 4% coupon due in three yrs Bond B 5% coupon due in 5 yrs Bond C 7% coupon due in 10 yrs Currently the structure of yields is positive so that each bond sells for its par value. However, you expect that inflation
Duration of a coupon paying bond is: Equal to its number of payments. Less than a zero coupon bond. Equal to the zero coupon bond. Equal to its maturity. None of the above.
CONSIDER THREE ZERO-COUPON, $1000 FACE-VALUE BONDS. BOND A MATURES ONE YEAR FROM TODAY. BOND B MATURES FIVE YEARS FROM TODAY, AND BOND C MATURES TEN YEARS FROM TODAY. THE CURRENT MARKET INTEREST RATE IS 11 PERCENT PER ANNUM (EFFECTIVE ANNUAL YIELD). a. What is the current price of each bond. b. If the market interest rate
Consider three zero-coupon, $1,000 face-value bonds. Bond A matures one year from today, Bond B matures five years from today and Bond C matures ten years from today. The current market interest rate is 11% per annum (effective annual yield). a. What is the current price of each bond? b. If the market interest rate suddenl
The company had $450,000 in callable bonds in the open market. The company's bonds were selling in the open market at 108 and were callable at 109. The company decided to retire the bonds early. Make the necessary journal entry(ies) to record the retirement of these bonds.
It is January 2007 This company is under some pressure and has a strict capital budget of $20 million, so they need to be careful as to which projects they choose. Examine the following book-value balance sheet for Fairfield Office supplies for the year 2006. What is the capital structure of the firm based on market values?
A General Motors bond carries a coupon rate of 8 percent, has 9 years until maturity, and sells at a yield to maturity of 7 percent. At what price does the bond sell? (Assume annual interest payments.) What will happen to the bond price if the yield to maturity falls to 6 percent?
A company's $500 million of 30-year bonds outstanding was issued at a coupon rate of 8%. On 5/1/03, two years after issuance, the market rate for bonds of similar characteristics falls to 5%. What should be the market price of the company's bonds on the bond market at 5/1/03? a. 66.85 b. 100 c. 144.69 d. 146.12