Homework Answers
| A | B | |
| 1 | Face value | 1000 |
| 2 | coupon rate | 8% |
| 3 | coupon amount (PMT)= B1*B2 | 80 |
| 4 | Yield to Maturity (NPER) (35-10 years) | 25 |
| 5 | Yield | 11% |
| 6 | 747.35 | |
| 7 | present value |
Formula
Present Value:
=-PV(B5,B4,B3,B1)
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Question 1 (1 point) Saved Stark Corporation issued bonds at $1.000 per bond. The bonds had...
Stark Corporation issued bonds at $1,000 per bond. The bonds had a 35 year life with...
Stark Corporation issued bonds at $1,000 per bond. The bonds had a 35 year life with a coupon rate of 8% paid annually. Assume 10 years later, due to bad publicity, the risk premium for the bonds have caused the risk premium to increase the overall market yields to 13%. The bonds have 25 years remaining until maturity. Compute the new price of the bond. Round to 2 decimal places. O $686.27 O $633.50 O$587.62 $747.35
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Wilson Oil Company issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the ann interest payment was then 9 percent. This return was in line with the required returns by bondholders at that point in time as described below: Real rate of return Inflation premium Risk premium Total return mm Assume that 10 years later, due to bad publicity, the risk premium is now 7 percent and is appropriately reflected in...
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The Vinny Cartier Company issued bonds at $1,000 per bond. The bonds had a 25-year life when issued, with semiannual payments at the then annual rate of 9 percent. This return was in line with required returns by bondholders at that point, as described below: Real rate of return 2 % Inflation premium 4 Risk premium 3 Total return 9 % Assume that ten years later the inflation premium is 3 percent, the risk premium has declined to 2 percent...
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