Question 9 - Non eof the above. Reason as below -
IF the bond is callable, the rate is higher as the corporate has option to refinance the debt at lower rate in future. This reduces surety of investors and as compensation, they require a higher rate at present date
IF the credit quality falls, it will result in rating downgrade and also increase the risk of defualt. A rise in default risk will lead to higher credit risk reward requirement by investor, thus increasing rate.
IF expected inflation rate is higher, then the investors will expect the entity to price the bond at higher interest rate so as to give them positive Real returns
Question 10 - Valuation of bond is - 693.25$
Question 9 "Which of the following would allow a corporation to issue a bond at a...
Which of the following would allow a corporation to issue a bond at a lower coupon rate, all else equal? The addition of a call provision to the bond The removal of protective covenants from the bond A deterioration in the corporation’s credit quality An increase in the expected inflation rate None of the options are correct.
Question 2 1 pts If the terms of a bond issue allow a corporation to redeem the bonds prior to their maturity date, then the bonds are said to contain a(n): capital gains provision interest rate provision call provision 0 put provision 0 coupon provision
AaBbCcD AaBbCeDdE A BbCeDdi AaBbo Str Sub Why would a corporation issue a bond (rather than stock)? 7-2 Key Characteristics of Bonds Briefly explain the cash inflows and outflows over the life of a bond from purchase until maturity from the investor's perspective. 7-3-1 Bond Valuation- Overview What is the difference between the face value and the par value of a bond? Does the investor get this amount back, and if so, at what time? 7-3-2 Bond Valuation-Example 1 Calculate...
A $1,000 par-value, fixed coupon bond has 17 years remaining until maturity. The bond has an annual coupon rate of 8 percent. If the market annual rate for this bond is 7.25 percent, what is the price of the bond? A 20-year bond pays $110 annually on a face value of $1,000. If similar bonds are currently yielding 8%, what is the bond price?
"A 10-year bond pays 5% (Paid Annually) on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond?" O $693.25 O $386.00 O "$3,390.85" O "$1,386.09 Question Completion Status: > A Moving to the next question prevents changes to this answer. Question 12 The difference between the price and the par value of a zero-coupon bond represents O taxes payable by the bond buyer O the accumulated principal over the...
Tyson Corporation has an outstanding issue of 25-year maturity corporate bond with face value of $1,000 and a coupon of 4%, paying coupon interest semi-annually. If the market rate of interest (YTM) is 6% on similar risk bonds, at what price would this bond trade in the market.
7. Paccione Corporation has a bond issue outstanding with 9 years to maturity, a coupon rate of 7.5 percent, and a $1,000 face value. The bonds pay coupons semi-annually. The bonds sell for $1,140. What is the yield to maturity on the bonds?
Tucker Corporation plans to issue new 20-year bonds that are callable after 5 years at a call premium of $1,050. Suppose this bond has a face value of $1,000 the price is currently $1,000. The coupon rate is 10% which is paid semiannually. Does the yield to maturity exceed the yield to call on this bond? a. Yes b. No c. Not enough information
P6-15 Basic bond valuation Complex Systems has an outstanding issue of $1,000-par-value bonds with a 12% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date. a. If bonds of similar risk are currently earning a 10% rate of return, how much should the Complex Systems bond sell for today? b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond....
Basic bond valuation Complex Systems has an outstanding issue of $1,000-par-value bonds with a 15% coupon interest rate. The issue pays interest annually and has 16 years remaining to its maturity date. a. If bonds of similar risk are currently earning a rate of return of 11%, how much should the Complex Systems bond sell for today? b. Describe the two possible reasons why the rate on similar-risk bonds is below the coupon interest rate on the Complex Systems bond....