Question

Company B just issued 10-year zero-coupon bonds. The face value of the bond is €1000. If...

Company B just issued 10-year zero-coupon bonds. The face value of the bond is €1000.

If those bonds sell for $553 what those bonds yield to maturity (YTM) is? Express your answer as percent.If the YTM doesn’t change what will be the price of those bonds next year? If this is the only bond issue that Company B has outstanding what is the after tax cost of debt of Company B? The tax rate is 30%.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Company B had issued 10-year bonds a year ago at the coupon rate 4%. The bond...
Company B had issued 10-year bonds a year ago at the coupon rate 4%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 5%. The face value of the bond is $1000. Calculate the current bond price. Company B has a second debt issue on the market, a zero coupon bond with 9.6 years left to maturity. The yield to maturity (YTM) of these bonds is 8 %. The face value of the bond is...
Company B had issued 10-year bonds a year ago at the coupon rate 10%. The bond...
Company B had issued 10-year bonds a year ago at the coupon rate 10%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 5%. The face value of the bond is €1000. Calculate the current bond price.
The yield-to-maturity (YTM) on one-year bond with zero coupon and face value $ 1000 is 5...
The yield-to-maturity (YTM) on one-year bond with zero coupon and face value $ 1000 is 5 %. The YTM on two-year bond with 5 % coupon paid annually and face value $ 1000 is 6 %. (i) What are the current prices of these bonds? (ii) Find Macaulay durations of these bonds. Consider a third bond which is a zero coupon two-year bond with face value $ 1000. (iii) What must be the price of the third bond so that...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity if the required return on these bonds is 3%? Consider a bond with par value of $1000, 25 years left to maturity, and a coupon rate of 6.4% paid annually. If the yield to maturity on these bonds is 7.5%, what is the current bond price? One year ago, your firm issued 14-year bonds with a coupon rate of 6.9%. The bonds make semiannual...
Company B had issued 10-year bonds two years ago at the coupon rate 5.5%. The bond...
Company B had issued 10-year bonds two years ago at the coupon rate 5.5%. The bond makes annual payments. The yield to maturity (YTM) of these bonds is 4%. The face value of the bond is €1000. a) What is the coupon payment each year? b) Calculate the current bond price. Is this premium or a discount bond? Explain
The price of one-year bond (A) with zero coupon and face value $ 1000 is $...
The price of one-year bond (A) with zero coupon and face value $ 1000 is $ 961.5. The price of two-year bond (B) with zero coupon and face value $ 1000 is $ 907. Consider a third bond (C), a two-year bond with $ 100 coupon paid annually and face value of $ 1000. (i) What must be the price of bond C so that the Law of One Price holds. Explain where you use LOOP. (ii) Suppose that the...
Suppose BMW issued a bond with 10 years until maturity, a face value of $1000, and...
Suppose BMW issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. a. What was the price of this bond when it was issued? b. Assuming that the YTM remains constant, what is the price of the bond immediately before it makes the first coupon payment? c. Assuming that the YTM remains constant, what is the...
The U.S. Treasury has just issued a five-year, $1000 (face value) bond with a coupon rate...
The U.S. Treasury has just issued a five-year, $1000 (face value) bond with a coupon rate of 5% and paying semi-annual coupons. The bond is currently trading at 957.35. Calculate the YTM on the bond. NOTE: This is a coupon bond. Please show all work
Jiminy's Cricket Farm issued a 30-year, 8 percent coupon bond 7 years ago. The bond makes...
Jiminy's Cricket Farm issued a 30-year, 8 percent coupon bond 7 years ago. The bond makes semi-annual coupon payments and sells for 90 percent of its face value. The face value of the debt issue is $24 million and the yield to maturity is 9.036%. Note: YTM for coupon bonds is quoted as an APR with semi-annual compounding. In addition, the company has a second debt issue on the market, a zero coupon bond with 7 years left to maturity;...
2) Assume that a company issued a bond with $1,000 face value, 10% coupon rate, 20...
2) Assume that a company issued a bond with $1,000 face value, 10% coupon rate, 20 years maturity, if this bond is sold after 5 years, how much this bond will be sold if the yield to maturity (YTM) is 8%? What is the current yield?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT