Question

A $1,000 face value corporate bond with a 6.5 percent coupon (paid semiannually) has 15 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.2 percent. The firm has recently gotten into some trouble and the rating agency is downgrading the bonds to BB. The new appropriate discount rate will be 8.5 percent. What will be the change in the bond’s price in dollars and percentage terms?

Answer #1

We can use PV () function in excel to find the value of bond at two different rates and can calculate the change

NPER = number of coupon payments

FV = Par value

PMT = coupon payment

RATE = Yield

With 7.2% yield

with 8.5% yield

So

% change in price with change in yield = ( 832.21 - 936.43 ) / 936.43 = - 11.129%

Let me know if you have any doubts

PLEASE RATE THUMBS UP IF YOU LIKE THE ANSWER

A $1,300 face value corporate bond with a 7.10 percent coupon
(paid semiannually) has 15 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 8.5 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 7.4 percent. What will be the change in the bond’s price in
dollars and percentage terms?

A $1,300 face value corporate bond with a 7.10 percent coupon
(paid semiannually) has 15 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 8.5 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 7.4 percent. What will be the change in the bond’s price in
dollars and percentage terms? (Round your answers to 3...

A $1,000 face value corporate bond with a 6.75 percent coupon
(paid semiannually) has 10 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 8.2 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 7.1 percent. What will be the change in the bond’s price in
dollars and percentage terms? round your answers to 3...

A corporate bond with a coupon rate of 8.3 percent has 15 years
left to maturity. It has had a credit rating of BBB and a yield to
maturity of 9.0 percent. The firm has recently gotten into some
trouble and the rating agency is downgrading the bonds to BB. The
new appropriate discount rate will be 10.3 percent. (Assume
interest payments are semiannual.)
What will be the change in the bond’s price in dollars?
What will be the change...

A $2,200 face value corporate bond with a 5.50 percent coupon
(paid semiannually) has 10 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 7.6 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 6.7 percent. What will be the change in the bond’s price in
dollars and percentage terms?

A $1,800 face value corporate bond with a 5.15 percent coupon
(paid semiannually) has 10 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 7.2 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 6.3 percent. What will be the change in the bond’s price in
dollars and percentage terms? (Round your answers to 3...

A $1,200 face value corporate bond with a 6.95 percent coupon
(paid semiannually) has 12 years left to maturity. It has had a
credit rating of BB and a yield to maturity of 8.4 percent. The
firm recently became more financially stable and the rating agency
is upgrading the bonds to BBB. The new appropriate discount rate
will be 7.3 percent. What will be the change in the bond’s price in
dollars and percentage terms? (Round your answers to 3...

A 9.3 percent coupon (paid semiannually) bond, with a $1,000
face value and 18 years remaining to maturity. The bond is selling
at $970. An 8.3 percent coupon (paid quarterly) bond, with a $1,000
face value and 10 years remaining to maturity. The bond is selling
at $900. An 11.3 percent coupon (paid annually) bond, with a $1,000
face value and 6 years remaining to maturity. The bond is selling
at $1,050. Round your answers to 3 decimal
places!!!!. (e.g.,...

an 11% coupon bond paying interest semiannually has a $1000 par
value and 15 years remaining until maturity. with its current
BB(Ba) rating, the bond has been priced to provide a yield to
maturity of 8.75%. But, that rating is expected to be revised to
BBB(Baa), which would cause the YTM to change by 75 basis points.
If that happens, the bond price should ______ by
$_______
a.rise,73.40
b.fall, 73.40
c.fall,80.13
show calculations for calculator with formula

bond has $1,000 face value, 25 years to maturity, 3.6% annual
coupon rate. The bond’s current price is $948.92. Assuming the bond
pays coupons semiannually, what is the bond’s yield to maturity
(YTM)?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 11 minutes ago

asked 14 minutes ago

asked 22 minutes ago

asked 22 minutes ago

asked 23 minutes ago

asked 29 minutes ago

asked 30 minutes ago

asked 30 minutes ago

asked 34 minutes ago

asked 35 minutes ago

asked 36 minutes ago