Question

- Carolina issued a 15-year semi-annual non-callable bond four years ago. Bond has a $1,000 face value, coupon rate of 6% and it currently sells for $945. Carolina needs to issue 10-year semi-annual note. Note will be non-callable and is expected to get the same credit rating as outstanding bond issue. If Carolina wants to issue and sell new note at par, find approximate coupon rate that needs to be assigned to the note. (Hint: similar bonds/notes should be providing approximately same return
- Consider Carolina’s outstanding bond in the problem above: it is semi-annual 15-year bond issued 4 years ago, it sells for $945 and has 6% coupon. If this bond were callable with 3 years prior to maturity, how can one estimate average expected profitability on this bond? (Assume call price of $1060).

Answer #1

Calculate the value of a non-callable 15-year bond with a face
value of $1,000 and a coupon rate of 6% compounded semi-annually if
you expect 7% yield on the bond.
Group of answer choices
$908
$876
$1,460
$504
$808

Seven years ago Hangar Corp. issued a 25-year bond with a 6
percent semi-annual coupon. The bond currently sells for
$815. (a) What is the bond’s yield to maturity (YTM)? (b) If the
bond can be called in six years for redemption price of $1,075,
what is the bond’s yield to call (YTC)?

A 15-year callable bond is currently issued at market interest
rate of 7.67%. Annual coupon rate is 10.5%.
The callable bond will be called in 4 years at $1,100.
What is YTC? (Assuming the bond is semi-annually
compounding.)
1. 13.15%
2. 8.12%
3. 6.32%
4. 10.50%
5. 5.69%

Calculate the value of a non-callable 10-year bond with a face
value of $1,000 and a coupon rate of 9% compounded semi-annually if
you expect 7% yield on the bond.
$1,142
$1,212
$1,782
$735
$1,042

A corporate bond with a face value of $200,000 was issued four
years ago and there are six years remaining until maturity. The
bond pays semi-annual coupon payments of $9,000, the coupon rate is
9% pa paid twice yearly and rates in the marketplace are 10% pa
compounded semi-annually. What is the value of the bond today?
a.
$200,000.00
b.
$152,092.13
c.
$196,454.05
d.
$191,136.75
e.
$193,536.79

Three years ago, Jack's automotive issued a 10 year callable
bond with a $1000 maturity value and a 7.75% coupon rate of
interest. Interest is paid semi- annually. The bond, which
matures in fives years, is currently selling for
$1065.
A. whist is the bond's yield to maturity?
B. If the bond can be called in 2 years for a call price of
$1090, which is the bond's yield to call?

A 15 year bond was issued six years ago. It has a Face Value of
$1000 and makes annual coupon payments of $42. If the current yield
to maturity is 4.0% pa, will this bond sell at a premium, discount
or at par today?
a.
premium
b.
not enough information provided to determine
c.
at par
d.
discount

AbC Corporations (ABC) issues a bond that pays 10% semi-annual
coupon, have a $1,000 face value, and mature in 10 years. If ABC
bonds are sold to yield 8%, what is the price of ABC bond at the
end of year
2. If ABC issue the same bond (same coupon rate, face value and
maturity) with ‘callable’ feature, would the price of ABC bond be
lower or higher? Explain.

An Institute issued a 30 year , 8 percent semi-annual bond 3
years ago. The bond currently sells for 93 percent of its face
value. The Company's tax rate is 35%,
a. What is the pre-taxed cost of debt?
b. What is the after tax cost of debt?

Three years ago, Jack’s Automotive Jacks issued a 20-year
callable bond with a $1,000 maturity value and an 8.5 percent
coupon rate of interest. Interest is paid semiannually. The bond is
currently selling for $1,046. * SET TO 4 DECIMAL
PLACES*
(a) What is the bond’s yield to maturity?
(b) If the bond can be called in four years for a redemption
price of $1,089, what is the bond’s yield to call?

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