Explore BrainMass

Explore BrainMass

    Bond Valuation

    BrainMass Solutions Available for Instant Download

    Yield to Call and Yield to Maturity - Bond Problems

    1) YIELD TO CALL: Six yrs ago, the Singleton Co issued 20-yr bonds with 14 percent annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 yrs of call protection. Today singleton called the bonds, Compute the realized rate of return for an investor who purchased the bonds when they were issued and h

    Calculating the current yield and yield to maturity

    Throughout this question consider the following bond: face value of $1,000, coupon rate is 8%, semi-annual coupon payments, 4 years of maturity, and a purchase price of $1,055.69. (a) Calculate the current yield and yield to maturity on the bond as of the date of purchase. (b) Calculate the current yield and bond price o

    Bond Valuation Question

    Lets assume 6-years ago, a company issued 20-yr bonds with a 14% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today, the company calls the bonds. How do I calculate the realized rate of return for an investor who purchased the bonds when they were issued and held

    Bond Valuation

    1).An investor has two bonds in his or her portfolio, Bond C and Bond Z each matures in 4 yrs, has a face value of $1,000, and has a yield to maturity of 9.6 %. Bond C pays a 10%percent annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years,

    Bond Yield

    Hath Foods' bonds have 7 years remaining to maturity. The bonds have face value of $1000 and a yield to maturity of 8 percent. They pay interest annually and have a 9 percent coupon rate. What is their current yield?

    Bond Maturity and Yield

    JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued, i.e., they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have a maturity of 10 years, a par value o

    two-year maturity bond

    A two-year maturity bond with a face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is (a) 6%, (b) 8%, (c) 10%. Solution Problem 4-22 Instructions

    Present Value: Remaining Maturity of Bonds

    Sure Tea Co. has issued 9% annual coupon bonds which are now selling at a yield to maturity of 10 percent and current yield of 9.8375%. What is the remaining maturity of these bonds? Use the NPER function to calculate the number of years till maturity. Face value of bond $1,000 Annual co

    book-value balance sheet for University Products, Inc

    Examine the following book-value balance sheet for University Products, Inc. What is the capital structure of the firm based on market value? The preferred stock currently sells for $15 per share and the common stock for $20 per share. There are one million common shares outstanding. BOOK VALUE BALANCE SHEET

    Debt for Olympic Sports

    Olympic Sports has two issues of debt outstanding. One is a 9 percent coupon bond with a face value of $20 million, a maturity of 10 years, and a yield to maturity of 10 percent. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 10 percent. The

    Find Value Factor on Coupon Rate

    With a 10% discount rate, the present value factors of $1 received at the end of each of the next three years are 0.909 and 0.751, respectively. Given these values, the present value of a $1,000 (par) 3-year corporate bond with an 8% coupon rate is?

    Finance Problems

    4. In a world in which your investment choices consist of a risky portfolio and a risk-free asset, the expected return on the former is 15%, and the return on the latter is 10% (which is also your borrowing rate). The standard deviation of the return on the risky portfolio is 20%. If your complete portfolio has a standard deviat

    Present value of cash flow / retained earnings

    34.. Given the following information, calculate Retained Earnings for 2004. Dividend Payout Ration = 40% 2004 Net Income = $5,150 2003 Retained Earnings = $12,800 35. Firms should finance long-term assets with short-term financing and short-term assets with long-term financing. TRUE FALSE 36. Calcula

    Yield to maturity

    The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1,000 par value; and the coupon interest rate is 9 percent. a. What is the yield to maturity at a current market price of (1) $829 or (2) $1,104? b. Would you pay $829 for one of these bonds if you thought that the

    The Difference between a Coupon and Market Rate

    If a bond has a coupon rate of 8% but the required rate (market rate) is 10%, will this bond sell at par, discount, or a premium. Please explain in detail, not understanding the difference between the coupon rate and the market rate.

    Bonds

    I purchased a $25,000 bond @ 104 as a long term investment on January 1, 2007. The bond pays interest annually on each Dec 31 and matures Dec 31, 2009. Assuming a straight line amortization, what is net amount of cash received from this investment over its life? How much cash is collected each year? How much premium will be

    Default risk

    Lets assume a T-bond that matures in 10 years has a yield of 5%. A 10-yr corporate bond has a yield of 7%. Assume that the liquidity premium (LP) on the corporate bond is 0.4%. How does one calculate the default rsik premium (DRP)?

    Bond Yields

    A Sprint bond has 5 years until maturity a coupon rate of 8 percent, and sell for 2,000. a. What is the current yield on the bond? b. What is the yield to maturity?

    Risk/Return, Yield Curve, Interest and Inflation Rates

    4. Risk and return Your uncle would like to restrict his interest rate risk and his default risk, but he would still like to invest in corporate bonds. Which of the possible bonds listed below best satisfies your uncle's criteria? AAA bond with 10 years to maturity. BBB perpetual bond. BBB bond wit

    Bond Prices and years to maturity: The Nickelodeon Manufacturing Co. has a series of $1000 par value bonds outstanding. If the required rate of return on bonds is 10%, what is the current price of: a) the bonds with 3 years to maturity?

    The Nickelodeon Manufacturing Co. has a series of $1000 par value bonds outstanding. Each bond pays interest semi-annually and carries an annual coupon rate of 7%. Some bonds are due in three years while others are due in 10 years. If the required rate of return on bonds is 10%, what is the current price of: a) the bonds wi

    Expected Return and Standard Deviation of Return of Stock Portfolio

    The probability that the economy will contract is 0.2. The probability of moderate growth is 0.6, and the probability of a rapid expansion is 0.2. If the economy contracts, you can expect a return on your portfolio of 5 percent. With moderate growth, your return will be 8 percent. If there is a rapid expansion, your portfolio wi

    Calculations- bonds, loans, present values

    Bond Prices and Yields, Bond Pricing, Loan Payments, Present Values Present Values Compute the present value of a $100 cash flow for the following combinations of discount rates and times: a. r = 8 percent. t = 10 years. b. r = 8 percent. t = 20 years. c. r = 4 percent. t = 10 years. d. r = 4 percent. t = 20 years

    Example Bond Problems

    For all the following multiple choice questions use the following information: ABC Co. issued a bond some time ago with a coupon rate of 10%. The market interest rate was then 11%. The bond is not due to mature for some time. The current market interest rate is 9%. (Your answer must be supported by a concise explanation.)

    ADVERTISEMENT