If Helga Inc. issued a bond that is currently selling for $950 has 7 years left until maturity and currently as a 10.4%...
If Helga Inc. issued a bond that is currently selling for $950 has 7 years left until maturity and currently as a 10.4% yield to maturity. What must the bond’s coupon price be?
|
$109.21 |
||
|
$93.59 |
||
|
$301.83 |
||
|
$46.88 |
||
|
None of these |
Homework Answers
Current value=Annual coupon*Present value of annuity factor(10.4%,7)+$1000*Present value of discounting factor(10.4%,7)
950=Annual coupon*4.80496295+1000*0.500283853
Annual coupon=(950-500.283853)/4.80496295
=$93.59(Approx).
NOTE:
1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate
=Annual coupon[1-(1.104)^-7]/0.104
=Annual coupon*4.80496295
2.Present value of discounting factor=1000/1.104^7
=1000*0.500283853
Add Answer to:
If Helga Inc. issued a bond that is currently selling for $950 has 7 years left until maturity and currently as a 10.4%...
If BRC Inc. issued a bond that is currently selling for $950 has 7 years left...
If BRC Inc. issued a bond that is currently selling for $950 has 7 years left until maturity and currently as a 10.4% yield to maturity. What must the bond s coupon payment be?
Which statement is correct? None of these. Long-term bonds have lower reinvestment rate risk than short-term...
Which statement is correct? None of these. Long-term bonds have lower reinvestment rate risk than short-term bonds. Long-term and short-term bonds are equally affected by a chance in interest rates. Long-term bonds have lower interest rate risk than short-term bonds. Long-term and short-term bonds from the same company have the same default risk. If Helga Inc. issued a bond that is currently selling for $950 has 7 years left until maturity and currently as a 9.4% yield to maturity. What...
A bond has just been issued. The bond is currently selling for $900. The bond will...
A bond has just been issued. The bond is currently selling for $900. The bond will mature in 14 years. The bond’s annual coupon rate is 7% and the face value of the bond is $1,000. Coupons will be paid annually. Excel Compute the bond’s yield to maturity.
A bond has just been issued. The bond is currently selling for $1050. The bond will...
A bond has just been issued. The bond is currently selling for $1050. The bond will mature in 7 years. The bond’s annual coupon rate is 16% and the face value of the bond is $1,000. Coupons will be paid semi-annually. Excel Compute the bond’s annual yield to maturity.
Gertrude Corp bonds have a 11% annual coupon, 7 years left until maturity, and they are currently selling for $1250. Wha...
Gertrude Corp bonds have a 11% annual coupon, 7 years left until maturity, and they are currently selling for $1250. What is the yield to maturity of Gertrude’s bonds? 13.38% None of these 6.45% 12.97% 6.00%
Betsco, Inc. has previously issued a bond that currently has 7 years left until maturity. The...
Betsco, Inc. has previously issued a bond that currently has 7 years left until maturity. The coupon rate of the bond is tied to LIBOR (specifically, its rate is LIBOR + 5%). The Director expects interest rate movements to negatively affect the interest expense generated by this debt obligation. Therefore, she wishes to effectively change her liability from floating to fixed. The most recently issued Treasury Note is yielding 6%. She contacts several banks that quote her the following: Bank...
A bond has just been issued. The bond is currently selling for $900. The bond will...
A bond has just been issued. The bond is currently selling for $900. The bond will mature in 9 years. The bond’s annual coupon rate is 6% and the face value of the bond is $1,000. Coupons will be paid annually. The bond is callable in 8 years and the call price is $1180. Excel Compute the bond’s yield to call.
A fixed coupon bond with 12 years left until maturity has a coupon rate of 7%...
A fixed coupon bond with 12 years left until maturity has a coupon rate of 7% paid semi-annually. If the price of the bond is $1,060, its annual yield to maturity is _______%. Par value is $1,000. A. 6.281 B. 6.274 C. 3.137 D. 6.395
Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value...
Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 11% (annual payments). The yield to maturity on this bond when it was issued was 5%. a. What was the price of this bond when it was issued? b. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment? c. Assuming the yield to maturity...
A callable bond has 15 years to maturity and can be called in 5 years. The...
A callable bond has 15 years to maturity and can be called in 5 years. The bond’s coupon rate is 12% with semi-annual coupon payments. The par value is $1000. If the bond is called, the call price will be $1100. The bond is currently selling for $1055.35 What is the difference between its yield-to-call and yield-to-maturity?
Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 11% (annual payments). The yield to maturity on this bond when it was issued was 5%. a. What was the price of this bond when it was issued? b. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment? c. Assuming the yield to maturity...
Most questions answered within 3 hours.
-
Video Concepts, Inc. (VCI) markets independently produced films
on DVDs through a variety of video retail...
asked 22 seconds from now -
A company’s target capital structure consists of 30% debt, 20%
preferred stock and 50% common stock....
asked 1 minute ago -
Come up with 2 questions regarding the study for the speaker (NO
QUIZ LIKE QUESTIONS, QUESTIONS...
asked 12 minutes ago -
Test developers use job analysis to establish ________ for
structured interviews.
Group of answer choices
criterion-related...
asked 11 minutes ago -
Calculate the pH change that occurs when you mix the following
with a buffer solution
that...
asked 29 minutes ago -
Combustion of Ethylene: C2H4 + 3 O2 -> 2 CO2 + 2H20
a) If the concentration...
asked 17 minutes ago -
When using a payroll register, Salaries and Wages Expense
equals the current period earnings of employees....
asked 23 minutes ago -
What is the molarity of an HCl solution if 27.9 mL of 0.14 M
NaOH are...
asked 38 minutes ago -
A demand function given by: Q = 300 ‒ 2P. What is the price
elasticity of...
asked 45 minutes ago -
in a period of rising prices, which of the following inventory
methods results in the lowest...
asked 45 minutes ago -
A +4.3 microCoulomb charge is 25 cm to the right of a -7.2
microCoulomb charge.
A)...
asked 1 hour ago -
Given that ph refers to a float, write a
statement that compares ph to 7.0 and...
asked 1 hour ago