We can find the price of bond using bond price formula:
Bond Price = coupon * (1 - (1+yield rate)^-n)/yield rate + face value/(1 + yield rate)^n
Lets take face value of bond is $100
n is year to maturity = 10 years
yield rate = 4.5% + spread
= 4.5% + .9%
= 5.4%
Coupon = 5% of $100
= $5
Bond price = 5 * (1 - 1.054^-10)/.054 + 100/(1.054)^10
= $96.97
Your firm has a credit rating of AA. You notice that the credit spread for 10-year...
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 89 basis points(0.89 %). Your firm's five-year debt has an annual coupon rate of 6.2%.You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.8%.What should be the price of your outstanding five-year bonds?
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 80 basis points (0.80%). Your firm's five-year debt has an annual coupon rate of 6.1% You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 2.5% What should be the price of your outstanding five-year bonds?
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 8383 basis points left parenthesis 0.83 % right parenthesis(0.83%). Your firm's five-year debt has an annual coupon rate of 5.5 %5.5%. You see that new five-year Treasury notes are being issued at par with an annual coupon rate of 1.5 %1.5%. What should be the price of your outstanding five-year bonds?
your firm has a credit rating of A. Notice that the credit spread for five years maturity is 83 basis point(0.83%) your firm's five year dept has an annual coupon rate of 6.3%. You see that new five year Treasury notes are being issued at par with an annual coupon rate of 2% what should be the price of your outstanding five year bonds?
Your firm has a credit rating of A. You notice that the credit spread for five-year maturity A debt is 85 basis points left parenthesis 0.85 % right parenthesis .(0.85%). Your firm's five-year has semi-annual coupons and a coupon rate of 6%. You see that new five-year Government of Canada bonds are being issued with a YTM of 3%. What should the price of your outstanding five-year bonds be? Assume a par value of $100.
please provide ste by step analysis
19. A firm issues two-year bonds with a coupon rate of 6.7%, paid semiannually. The credit spread for this firm's two vear debt is 0.8%. New two-year Treasury notes are being issued at par with a coupon rate of 3.1%. What should the price of the firm's outstanding two-year bonds be per $100 of face value?
A fixed-income portfolio manager believes that within one year the credit spread of ABC firm will fall. Next week, ABC Corporation will be coming to market with a 15-year senior bond issue at par with a coupon rate of 8%, offering a spread of 400 basis points over the 15-year Treasury issue. Rather than purchase the bonds, the fixed income manager prefers to express her view on the company’s credit risk by entering into a total return swap that matures...
Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5% B 5.25% a. Given the yields for bonds with different credit ratings, what would be the fair price of a 5-year maturity bond, which currently has identical risk to a bond rated ‘A’, if it has a coupon rate of 12% paid annually, and a par value of $1,000? b. What would be the price of the bond 3 years from today if the bond is expected...
Using calculating formula Credit Rating Yield AAA 3% AA 3.2% A 3.5% BBB 3.8% BB 4.5% B 5.25% a. Given the yields for bonds with different credit ratings, what would be the fair price of a 5-year maturity bond, which currently has identical risk to a bond rated ‘A’, if it has a coupon rate of 12% paid annually, and a par value of $1,000? b. What would be the price of the bond 3 years from today if the...
Rating agencies such as Standard & Poor's (S&P), Moody's Investor Service, and Fitch Ratings-assign credit ratings to bonds based on both quantitative and qualitative factors. These ratings are considered indicators of the issuer's default risk, which impacts the bond's interest rate and the issuer's cost of debt capital. Based on these ratings, bonds are classified into investment-grade bonds and junk bonds. Which of the following bonds is likely to be classified as a junk bond? A bond with a B...