You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2019. The bonds have a par value of $2,000 and semiannual coupons. |
Company (Ticker) |
Coupon | Maturity | Last Price |
Last Yield |
EST $ Vol (000’s) |
Xenon, Inc. (XIC) | 6.700 | Jan 15, 2036 | 94.313 | ?? | 57,375 |
Kenny Corp. (KCC) | 7.250 | Jan 15, 2035 | ?? | 5.40 | 48,954 |
Williams Co. (WICO) | ?? | Jan 15, 2042 | 94.865 | 7.10 | 43,815 |
a. |
What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
b. | What is the bond’s current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Given,
Par value = $2000
Coupon rate = 7.25%
Yield = 5.40% or 0.054
Years to maturity = 16 years ( From January 15, 2019 to January 15, 2035)
Solution :-
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