Homework Answers
A-callable bond because the issuer have an option to call the bonds before maturity
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_bond is a bond where the issuer has an option to retire the bond before maturity...
A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures...
A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a 584.52 discount from par value. The approximate yield to maturity on this bond is A6% B. 7% C. 8% D. 9% For a discount bond, its coupon rate is_than its yield to maturity and its price is expected to ___over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A...
bond gives the issuer an option to retire the bond before maturity at a specific price
bond gives the issuer an option to retire the bond before maturity at a specific price
10. A callable corporate bond can be purchased by the bond issuer before maturity for a...
10. A callable corporate bond can be purchased by the bond issuer before maturity for a price specified at the time the bond is issued. Corporation X issues two bonds (bond A and bond B) at the same time with the same maturity, par value, and coupons. However, bond A is callable and bond B is not. Which bond will sell for a higher price and why? (a) Bond B; bond A should have the value of bond B minus...
Hialurily date. • A bond issuer is said to be in default if it does not...
Hialurily date. • A bond issuer is said to be in default if it does not pay the interest or the principal in accordance with the terms of the indenture! agreement or if it violates one or more of the issue's restrictive covenants. • A bond contract feature that requires the issuer to retire a specified portion of the bond issue each year is called a sinking fund provision • A bond's call provision gives the issuer the right to...
For a discount bond, its coupon rate is_ than its yield to maturity and its price...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
Which of the following statements is CORRECT about repayment provisions of bonds? A) The issuer of...
Which of the following statements is CORRECT about repayment provisions of bonds? A) The issuer of a callable bond will exercise the call option when the market interest rate exceeds the coupon rate of the bond. B) A convertible bond generally pays a higher coupon rate than an identical non-convertible bond. C) Bonds with a sinking funds provision can be paid back later than their maturity date. D) Holders of a convertible bond should exercise the conversion option when the...
Question 4 A bond has the following characteristics: Maturity 12 years Coupon 10% YTM 9.5% Noncallable...
Question 4 A bond has the following characteristics: Maturity 12 years Coupon 10% YTM 9.5% Noncallable a) Calculate the price now. Evaluate the price if yield was to increase by 150 bps. b) Evaluate if the yield fell by 300bps? How would the outcome be changed with a callable bond? Specifically, from point of view of both issuer and buyer.
Chapter 9 Homework Assignment 1) A written promise to repay a loan principal plus interest at...
Chapter 9 Homework Assignment 1) A written promise to repay a loan principal plus interest at a specific future date is A) a promissory note. B) a line of credit. C) commercial paper. D) a product warranty. E) a returnable deposit. 2) ________ are subject to redemption before maturity at the option of the issuer. A) Debentures B) Mortgage bonds C) Callable bonds D) Sinking fund bonds E) Convertible bonds 3) Convertible bonds are attractive to investors because A) the...
General Electric bonds have a par value of $1,000, sell for $1,070, mature in 6 years,...
General Electric bonds have a par value of $1,000, sell for $1,070, mature in 6 years, and have a 7% coupon rate paid annually. a. Calculate the current yield and yield to maturity for this bond. b. Calculate the realized compound yield for an investor with a 4-year horizon and a reinvestment rate of 5% over the period. At the end of the 4 years, assume that the coupon bonds will sell at a YTM of 6%. c. Explain why...
Bond B Settlement Date Maturity Date Coupon Rate Required Return (YTM) Redemption Value Frequency...
pleas the answer using excel
Bond B Settlement Date Maturity Date Coupon Rate Required Return (YTM) Redemption Value Frequency Basis 28/3/19 15/8/34 10.00% 8.00% 1,000 Modified Duration Convexity Predicted % Change
Bond B Settlement Date Maturity Date Coupon Rate Required Return (YTM) Redemption Value Frequency Basis 28/3/19 15/8/34 10.00% 8.00% 1,000 Modified Duration Convexity Predicted % Change
A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a 584.52 discount from par value. The approximate yield to maturity on this bond is A6% B. 7% C. 8% D. 9% For a discount bond, its coupon rate is_than its yield to maturity and its price is expected to ___over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A...
bond gives the issuer an option to retire the bond before maturity at a specific price
10. A callable corporate bond can be purchased by the bond issuer before maturity for a price specified at the time the bond is issued. Corporation X issues two bonds (bond A and bond B) at the same time with the same maturity, par value, and coupons. However, bond A is callable and bond B is not. Which bond will sell for a higher price and why? (a) Bond B; bond A should have the value of bond B minus...
Hialurily date. • A bond issuer is said to be in default if it does not pay the interest or the principal in accordance with the terms of the indenture! agreement or if it violates one or more of the issue's restrictive covenants. • A bond contract feature that requires the issuer to retire a specified portion of the bond issue each year is called a sinking fund provision • A bond's call provision gives the issuer the right to...
For a discount bond, its coupon rate is_ than its yield to maturity and its price is expected to __over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A corporate bond has a 30-year maturity and pays interest annually. The quoted coupon rate is 10% and the bond is priced at par. The boond is callable in 5 years at 120% of par. What is the bonds yield to call? (Choose the closest one)...
pleas the answer using excel
Bond B Settlement Date Maturity Date Coupon Rate Required Return (YTM) Redemption Value Frequency Basis 28/3/19 15/8/34 10.00% 8.00% 1,000 Modified Duration Convexity Predicted % Change
Bond B Settlement Date Maturity Date Coupon Rate Required Return (YTM) Redemption Value Frequency Basis 28/3/19 15/8/34 10.00% 8.00% 1,000 Modified Duration Convexity Predicted % Change
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