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# Bond Valuation

### Bonds

If you had to create an unusual bond and describe its features, what would it be? Why would you think this is a great bond for investors?

### What is the price of a General Motors bond?

A General Motors bond carries a coupon rate of 8 percent, has 9 years until maturity, and sells at a yield to matruity of 7 percent. a. What interest payments do bondholders receive each year? b. At what price does the bond sell? (assume annual interest payments) c. What will happen to the bond price if the yield to maturi

### Calculating Current Yield and Yield to Maturity

An AT&T bond has 10 years until maturity, a coupon rate of 8 percent, and sells for \$1100. a. What is the current yield on the bond? b. What is the yield to maturity? Please show all work. Thanks!

### Personal Finance

I have a formula that I am struggling with for my for personal finance class. 9. An investor purchase a bond for \$953 on January 2, 1997. The bond has a face value of \$1,000 and a stated interest rate of 6.85 percent. It matures on December 31, 2016. The yield to maturity on this bond is _____ percent. ____a. 6.85

### Market value of bonds

In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporation's balance sheet as of today, January 1, 2002, is as follows: Long-term debt (bonds, at par) \$10,000,000 Preferred stock

### Calculating Cost of Equity

Yield Risk Premium Approach problem (also attached): The earnings, dividends and stock price of Carpetto Technologies Inc are expected to grow @ 7% per year in the future. Carpetto's common stock sells for \$23 per share, its last dividend was \$2.00 and the company will pay a dividend of \$2.14 at the end of the current year.

### Corporate finance multiple choice questions: CAPM, price of bonds, dividends

1) You are holding a stock which is currently in equilibrium. The required rate of return on the stock is 15 percent when the required return on the S&P 500 index is 10 percent. What will be the percentage change in the required return on the stock if the required return on the S&P 500 index increases by 30% while the risk free

### Bond Valuation-Current Price

I have two problems and I am drawing a blank on how to work them. Please provide step by step calculations for each. 1. Assume that you wish to purchase a 20-year bond that has a maturity value of \$1,000 and makes semiannual interest payments of \$40. If you require a 10 percent simple yield to maturity on this investment,

### Bond Problem

Just need some guidance in what steps I need to do to answer these questions. Thanks! A 10 year, 12% semiannual coupon bond, with a part value of \$1,000 may be called in 4 years at a call price of \$1,060. The bond sells for \$1,100 (assume this bond has just been issued). What is the bonds yield to maturity? What is the

### Valuing a Bond

Use the RATE, NPER, and PV functions to solve for "X". Please show the forumulas utilized in an excel format and explain. Face Value of Bond \$1,000 (Zero Coupon) Price - \$300 Maturity (Years) - 30 Yield to Maturity - X% Price - \$300 Maturity (Years) - X Yield to Maturity - 8% Price - \$X Maturity (Years) - 10

### Price of a bond and the bonds yield to maturity; time value of money

Fully answer questions please. 1. Describe the relationship that exists between the price of a bond and the bonds yield to maturity (YTM) Why does this relationship exist? 2. Explain the concept of time value of money. How is it applied in finance and why is it so important? thanks

### Capital Structure (Cost of Capital) Bonds & Stocks

Examine the following book-value balance sheet. What is the capital structure of the firm based on market value? Solve for Formulas below? The preferred stock currently sells for \$15 per share and the common stock for \$20 per share. There are one million common share outstanding. Assets Cash and short-term securities

### Bond Valuation

You are contemplating the purchase of a 20-year bond that pays \$50 in interest each six months. You plan to hold this bond for only 10 years, at which time you will sell it in the marketplace. You require a 12 percent annual return, but you believe the market will require only an 8 percent return when you sell the bond 10 year

### Semiannual Compounding, bonds, Securities; RRR, growth rate, common stock,

See attached file. Use semiannual compounding on all bond problems unless otherwise indicated 1. Will you invest in a security that has a current price of \$50, a growth rate of 6% and an expected dividend of \$3.80 if your RRR is 12%? 2. Would you invest in the stock in #18 if your RRR was 8%? Would you invest in it if t

### Semiannual Compounding on Bond, Coupon Bond, Rate, Interest, Yield, change

See attached file. Use semiannual compounding on all bond problems unless otherwise indicated. 1. Determine the price of a \$1,000 6% coupon rate bond that pays interest semiannually and has 5 years before maturity when similar securities have yields of 5%. 2. How much money will you be willing to pay for a 3 year \$1,000

### Bonds

The following information applies to all three parts: A bond with a face value of \$10,000 pays \$600 in interest every six months for 10 years and a lump sum of \$10,000 at the end of the tenth year. The current market requires 10% interest compounded semiannually. 1) What would an invester be willing to pay now for the \$1

### Current yield of a bond

Health Foods' bonds have 7 years remaining to maturity. The bonds have a face value of \$1,000 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 valuation is assessed.

Callaghan Motors bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. What is the current market price of these bonds?

### Return on Stocks and Bonds

1) SCENARIO ANALYSIS: Consider the following scenario analysis; Scenario Probability Stock Bonds Recession .20 -5% +14% Normal economy .60 +15 +8% Boom .20 +25 +4% a)  Is it re

### Scenario & Portfolio Analysis for a Return on Stocks and Bonds

1) SCENARIO ANALYSIS: Consider the following scenario-analysis RATE OF RETURN Scenerio Probability Stocks Bonds recession .20 -5% +14% normal economy .60

### Valuing Bonds-Bond Yields ( current yield, yield to maturity), Bond returns, Price of bonds,

How do I calculate Bond Yields: An AT&T bond has 10 years until maturity, a coupon rate of 8 percent, and sells for \$1,000? a.What is the current yield on the bond? b.What is the yield to maturity? And in BOND RETURNS how do I calculate the following: a. If the AT&T bond in the above problem has a yield to maturity of

### Yield to maturity

A firm has just issued \$1,000 face value bonds with an annual coupon rate of 8%, paid semi-annually, and a maturity of 10 years. If the issue price for this is \$770.6 what is the yield-to-maturity, stated annually?

### Bonds

Lambert Corning, Inc. specializes in buying heavily undervalued bonds. To do that this firm mainly searches bonds, which are being trading at well below par value and have relatively longer period to maturity. He has his eye on a bond issued by King Co. The \$1,000 par value bond provides 11 percent annual coupon rate and has

### What are the cash flows associated with owning this bond for each year?

You are considering buying a U.S. government bond with the face value of \$1000. The bond pays an annual coupon payment of \$80 and it matures in 5 years. The bonds coupon rate is 8%. What are the cash flows associated with owning this bond for each year?

### David Ortiz Motors has a target capital structure of 40 percent debt and 60 percent equity.

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 9.6 percent. What is the company's cost of equity capital?

### Bond Price Movement and Interest Rate Risk questions: Need to have problems solved in Excel. 1) Bond X is a premium bond making annual payments. Bond Y is a discount bond making annual payments. What are the prices of these bonds today? 2) Bond J is a 4 percent coupon. Bond S is a 14 percent coupon bond. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?

1) Bond Price Movements. Bond X is a premium bond making annual payments. The bond pays 9 percent coupon, has a YTM of 7 percent, and also has a 13 years to maturity. Bond Y is a discount bond making annual payments. This bond pays a 5 percent coupon , has YTM of 7 percent, and also has 13 years to maturity. What are the pr

### Does one always earn the yield to maturity on bonds? Explain.

Does one always earn the yield to maturity on bonds? Explain.

### A 15-year bond with an 8 percent annual coupon has a face value of \$1,000.

A 15-year bond with an 8 percent annual coupon has a face value of \$1,000. The bond's yield to maturity is 7 percent. What is the bond's current yield? a. 3.33% b. 5.00% c. 7.33% d. 7.50% e. 8.00%

### Market value of firm's debt

In order to accurately assess the capital structure of a firm, it is necessary to convert its balance sheet figures to a market value basis. KJM Corporation's balance sheet as of today, January 1, 2001, is as follows: Long-term debt (bonds, at par) \$10,000,000 Preferred stock \$2,000,000 Common stock (\$10 par) \$1

### A Bond Issued by the State of Pennsylvania

A bond issued by the State of Pennsylvania provides a 9 percent yield. What yield on a Synthetic Chemical Company bond would cause the two bonds to provide the same after-tax rate of return to an investor in the 36 percent tax bracket? 14.06% 17.50% 7.00% 12.50% 9.00%.