Question

Ray Co.’s bonds, maturing in 3 years, pay 8 percent interest on a $1,000 face value. Interest is paid once per year. If your required rate of return is 6 percent, what is the value of the bond? (10 points). Assume that the modified duration of this bond is 2.80 years. If the market yield rises by 1%, how much change will there be in the bond's price in %? (5 points). What will be the new price of the bond?

Answer #1

Trembol Co.’s bonds, maturing in 3 years, pay 7 percent interest
on a $1,000 face value. Interest is paid once per year. If your
required rate of return is 6 percent, what is the value of the
bond? Assume that the modified duration of this bond is 2.65 years.
If the market yield rises by 1%, how much change will there be in
the bond's price in %? What will be the new price of the bond?

Flora Co.'s bonds, maturing in 13 years, pay 6 percent
interest on a $1,000 face value. However, interest is paid
semiannually. If your required rate of return is
16 percent, what is the value of the bond? How would
your answer change if the interest were paid
annually?
a. If the interest is paid semiannually, the value of the bond
is

(Bond valuation) Flora Co.'s bonds, maturing in 8 years, pay
13 percent interest on a $ 1,000 face value. However, interest is
paid semiannually. If your required rate of return is 8 percent,
what is the value of the bond? How would your answer change if the
interest were paid annually?
Please answer in excel functions if possible

Flora Co.'s bonds, maturing in 17 years, pay 11 percent
interest on a $ 1000 face value. However, interest is paid
semiannually. If your required rate of return is 15 percent, what
is the value of the bond? How would your answer change if the
interest were paid annually?

A HCA bond, maturing in 7 years, pays 8 percent interest on a
$1,000 face value. However interest is paid semi-annually. If your
required rate of return is 10 percent, what is the value of the
bond? What is the value if the interest were paid annually?

2.8 Calculate the duration of a 6 percent, $1,000 par bond
maturing in three years if the yield to maturity is 10 percent and
interest is paid semiannually. b. (3 points) Calculate the modified
duration for this bond.
2.9 Calculate the convexity of the bond in 2.8.
2.10 Given the results in 2.8 and 2.9, if the price of the bond
before yields changed was $898.49, what is the resulting price
taking into account both the effect of duration and...

Fitzgerald's 35-year bonds pay 11 percent interest annually on
a $1,000 par value. If the bonds sell at $875, what is thebond's
yield to maturity? What would be the yield to maturity if the
bonds paid interest semiannually? Explain the difference.
a. The bond's yield to maturity if the bond pays interest
annually is __%.
The bonds yield to maturity if the bond pays interest
semiannaually is __

(Bond valuation) Fingen's
14-year,
$1,000
par value bonds pay
8
percent interest annually. The market price of the bonds is
$1,100
and the market's required yield to maturity on a
comparable-risk bond is
5
percent.
a. Compute the bond's yield to maturity.
b. Determine the value of the bond to you, given your required
rate of return.
c. Should you purchase the bond?
a. What is your yield to maturity on the Fingen bonds given the
market price of the...

Suppose you purchase a zero coupon bond with a face value of
$1,000, maturing in 21 years, for $215.00. Zero coupon bonds
pay the investor the face value on the maturity date. What is the
implicit interest in the first year of the bond's life?
The implicit interest in the first year of the bond's life is
? (Round to the nearest cent.)

Suppose you purchase a zero coupon bond with a face value of
$1,000, maturing in 20 years, for $214.55. Zero coupon bonds pay
the investor the face value on the maturity date. What is the
implicit interest in the first year of the bond's life? The
implicit interest in the first year of the bond's life is
_________. (Round to the nearest cent.)

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