Please show your work. Thank you Q7. Today is May 15, 2000. (a) Compute (bootstrap) the...
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Q7. Today is May 15, 2000 (a) Compute (bootstrap) the discount curve Z(0,T) for T 6 month, 1 year, and 1.5 years from the following data: . A 6-month zero coupon bond priced at $96.80 (issued 5/15/2000) . A 1-year note with 5.75% coupon priced at $99.56 (issued 5/15/1998) . A 1 5-year note with 7.5% coupon priced at $100.86 (issued 11/15/1991) (b) Once you get the discount curve Z(0, T) you take another...
Q7. Today is May 15, 2000. (a) Compute (bootstrap) the discount curve Z(0,T) for T -6 month, 1 year, and 1.5 years from the following data: . A 6-month zero coupon bond priced at $96.80 (issued 5/15/2000) . A 1-year note with 5.75% coupon priced at $99.56 (issued 5/15/1998) . A 1.5-year note with 7.5% coupon priced at $100.86 (issued 11/15/1991) (b) Once you get the discount curve Z(0, T) you take another look at the data and you find...
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Q4. Use the semi-annually compounded yield curve in the following table to price the some fixed income securities: 0.50 1.00 1.5 6.49% (a) 1.5-year zero coupon bond (b) 2-year coupon bond paying 15% semiannually (d) 1.5-year coupon bond paying 9% annually (e) 2-year floating rate bond with zero spread and semiannual payments (f) 1.5-year floating rate bond with zero spread and annual payments. For this question, assume ri (-0.5, 0.5)-6%. (h) 1.5-year floating rate...
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8) Crout Company has outstanding perpetual bonds that pay annual coupon of 3% annually. Crout has assessed that the required rate of return on these bonds today is 5.6%. At what price are the bonds expected to trade in the market today? 9) Six years ago, Antitea Corp. sold a 20-year bond with a 14% annual coupon rate, and a 9% call premium over par. Today,...
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1) The U.S. Treasury issued a 7-year maturity, $1000 par value bond exactly 3 years ago. The bond pays a nominal coupon rate of 12%. The coupon payments are paid semi-annually The most recent coupon payment (the sixth coupon payment) was made yesterday. Your required rate of return from the bond is 10% per year What is the price of the bond today? If the bond...
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Bond Valuation Exercises: OM Question 1. GTF Corporation has 5 percent coupon bonds on the market with a par of $1,000 and 10 years left to maturity. The bonds make annual interest payments. If the market interest rate on these bonds is 7 percent, what is the current bond price? Question 2. MTV Corporation has 7 percent coupon bonds on the market with a par of $1,000 and 8...
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Scan Solutions, Inc. issued a 15 year maturity, 6% semi-annual coupon paying bond 7 years ago. You purchased the bond at par value at the time of issue. You intend to sell the bond now. Similar maturity, similar risk bonds currently yield 8.2% per year. a) What price do you expect to receive for the Scan Solutions bond if you sell it today? b) What is...
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3. Five years ago you bought a 5% coupon bond with a 15-year remaining maturity. At that time the bond had a yield to maturity of 6%. Today you sold the bond for $1,250. Given that the bond paid coupons semiannually, what was your effective annual rate of return on this investment? (Assume the first coupon was paid 6 months after you purchased the bond) Answer: 11.7995%
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May 1 18 palu al malurily. Accepted a 120-day, 13% note from Licata Company in exchange for its account receivable of $4,800. Received a $6,900, 90-day, 12% note from Eagle Manufacturing Corporation for a credit sale. Sold both the Licata and Eagle notes with recourse at the bank at 14%. (Assume that Blackmon normally does not sell its notes.) The estimated value of the recourse liability for the Licata and...
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Roberto Inc. is a manufacturing company. The company has always followed their ideal capital structure which the management insists is 40% debt and 60% equity capital. The company can issue bonds for 9% coupon rate with 22 years to maturity. The interest is paid semi-annually. The bonds can be issued with a price of $835.42 today. Roberto's marginal tax rate is 40%. For cost...