Homework Answers
(a)
Compute the current yield, using the equation as shown below:
Current yield = Face value*Rate of interest/ Bond price
= $1,000*6%/ $1,030
= 5.83%
Hence, the current yield is 5.83%.
(b)
Compute the value of the bond on a stock price basis, using the equation as shown below:
Bond value = Number of shares received against each bond*Share price
= 25 shares*$33
= $825
Hence, the value of the bond is $825.
(c)
Compute the stock price based on the market price of the bond, using the equation as shown below:
Stock price = Market value of bond/ Number of shares received against each bond
= $1,030/ 25 shares
= $41.20
Hence, the stock price is $41.20.
(d)
Compute the amount of premium paid at the time of purchasing the bond, using the equation as shown below:
Premium = Bond market value – Value of bond on the basis of stock
= $1,030 - $825
= $205
Hence, the amount of premium is $205.
Add Answer to:
appendix b
appendix d
en the following information concerning a convertible bond: - Principal: $1,000 ....
appendix b appendix d A $1.000 bond has a coupon of percent and matures after twelve...
appendix b
appendix d
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Appendix b appendix d a. A $1,000 band has a 5.5 perent coupon and matures alter...
Appendix b
appendix d
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A $1,000 bond has a 7.5 percent coupon and matures after nine years. If current interest...
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years. If current interest rates are 9 percent, what should be the
price of the bond? Assume that the bond pays interest annually. Use
Appendix B and Appendix D to answer the question. Round your answer
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$
If after five years interest rates are still 9 percent, what
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appendix b
appendix d
A $1.000 bond has a coupon of percent and matures after twelve years, and that the bond pays interest any What would be the bond's price comparable debt yields 7 percent Appendix and Appendix tower the question. Round your answer to the nearest dola What would be comparedebt ved 7 percent and matures after six years and send to the sound your answer to than the p ayment of the bord in in Why are the...
Appendix b
appendix d
a. A $1,000 band has a 5.5 perent coupon and matures alter eleven years. If current interest rates are 8 percent, what should be the price of the band? Assume that the bond pay terest annually. Use Appendix Band Appendix to answer the question. Round your answer to the nearest dollar b. after five years terest rates are terest annually Round you and Appendix to answer the question. Assume that the bond pas percent, what should...
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