Homework Answers
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE. USED EXCEL, NEED HELP WITH FINANCIAL CALCULATOR, LET ME KNOW.
ANSWER 1 :BOND 1 HAS GREATEST % CHANGE IN PRICE.
ANSWER 2 : BOND 1 : PRICE = 960.44, % CHANGE = - 3.96%
BOND 2 : PRICE = 973.79, % CHANGE = - 2.62%
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You are considering the purchase of a bond and have two investment options as follows: Purchase...
You are considering the purchase of a bond and have two investment options as follows: Purchase...
You are considering the purchase of a bond and have two investment options as follows: Purchase price of both bonds is par/face value Bond #1 -- Annual Coupon 8.0% and pays semi-annual interest --Term 5 years Bond #2 -- Annual Coupon 7.0% and pays semi-annual interest --Term 3 years What if interest rates suddenly increase by 1%, which bond would have the greatest percentage change in price and what is the price and percentage change for each bond?
Bond Valuation Assume that you are considering the purchase of a 20-year, non- callable bond with...
Bond Valuation Assume that you are considering the purchase of a 20-year, non- callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 8.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Yield to Maturity Radoski Corporation's bonds make an annual coupon interest payment of 7.35%. The bonds have a...
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Bond Coupon Rate Maturity Year Par Value 1 7.5% 2032 1000 2 8.25% 2029 1000 3 6.0% 2023 1000 a.) Assuming that bonds pay annual coupon, estimate the market value of each bond at a discount rate of 7.4% b.) Assuming that bonds pay annual coupon, what will happen to the price of each bond if market rates suddenly decrease from 7.4% to 6.2%? Which of the three bonds will have the greatest percentage change in price? c.) Assuming that...
Both Bond Alpha and Bond Beta have 8% coupons, $1,000 face-value, make semi-annual payments and are...
Both Bond Alpha and Bond Beta have 8% coupons, $1,000 face-value, make semi-annual payments and are priced at par value. Bond Alpha has 2 years to maturity, whereas Bond Beta has 15 years to maturity. If interest rates suddenly rise by 2%, what is the percentage change in the price of Bond Alpha relative to the original price? If rates were to suddenly fall by 2%, what would the percentage change in the price of Bond Alpha relative to the...
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You are planning to buy a bond and are considering 2 options. Your one requirement is that you need to buy the lower price bond. Your desired nominal yield after tax is 4%, convertible semi-annually. The details of the 2 bonds under consideration are as follows: A corporate bond with a 10,000 par value, a 4 year term, and a coupon rate of 6% payable semi-annually. The tax rate applicable on corporate bond coupon payments is 30%. The bond will...
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A) You are considering the purchase of a $1,000 par value bond with a coupon rate...
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4. Both Bond A and Bond B have 6% coupons, make semiannual payments, and are priced...
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You are considering the purchase of a bond and have two investment options as follows: Purchase price of both bonds is par/face value Bond #1 -- Annual Coupon 8.0% and pays semi-annual interest --Term 5 years Bond #2 -- Annual Coupon 7.0% and pays semi-annual interest --Term 3 years What if interest rates suddenly increase by 1%, which bond would have the greatest percentage change in price and what is the price and percentage change for each bond?
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4. Both Bond A and Bond B have 6% coupons, make semiannual
payments, and are priced at par value. Bond A has three years to
maturity, whereas Bond B has 20 years to maturity. If the interest
rates suddenly rise by 2 percent point to 8%, what is the
percentage change in the price of Bond A and Bond B? If rates were
to suddenly fall by 2 percent points to 4% instead, what would be
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