Question

Lourdes Corporation's 13% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 20 years, are callable 4 years from today at $1,075. They sell at a price of $1,279.30, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.

- What is the best estimate of these bonds' remaining life? Round
your answer to two decimal places.

years - If Lourdes plans to raise additional capital and wants to use
debt financing, what coupon rate would it have to set in order to
issue new bonds at par?

- Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC.
- Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTM.
- Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as that on the existing bonds.
- Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as the current yield on the existing bonds.
- Since interest rates have risen since the bond was first issued, the coupon rate should be set at a rate above the current coupon rate.

Answer #1

Lourdes Corporation's 12% coupon rate, semiannual payment,
$1,000 par value bonds, which mature in 10 years, are callable 6
years from today at $1,050. They sell at a price of $1,306.57, and
the yield curve is flat. Assume that interest rates are expected to
remain at their current level.
What is the best estimate of these bonds' remaining life? Round
your answer to two decimal places.
If Lourdes plans to raise additional capital and wants to use
debt financing, what...

1.)
Last year Janet purchased a $1,000 face value corporate bond
with an 8% annual coupon rate and a 15-year maturity. At the time
of the purchase, it had an expected yield to maturity of 12.09%. If
Janet sold the bond today for $1,055.86, what rate of return would
she have earned for the past year? Do not round intermediate
calculations. Round your answer to two decimal places.
2.)
Bond X is noncallable and has 20 years to maturity, a...

Lourdes Corporation's 10% coupon rate, semiannual payment,
$1,000 par value bonds, which mature in 10 years, are callable 3
years from today at $1,025. They sell at a price of $1,110.37, and
the yield curve is flat. Assume that interest rates are expected to
remain at their current level.
What is the best estimate of these bonds' remaining life? Round
your answer to the nearest whole number.

Lourdes Corporation's 15% coupon rate, semiannual payment,
$1,000 par value bonds, which mature in 25 years, are callable 4
years from today at $1,050. They sell at a price of $1,334.08, and
the yield curve is flat. Assume that interest rates are expected to
remain at their current level.
What is the best estimate of these bonds' remaining life? Round
your answer to the nearest whole number.

Absalom Motors's 12% coupon rate, semiannual payment, $1,000 par
value bonds that mature in 20 years are callable 3 years from now
at a price of $1,075. The bonds sell at a price of $1,252, and the
yield curve is flat. Assuming that interest rates in the economy
are expected to remain at their current level, what is the best
estimate of investror's rate of return?
A 9.22%
B 4.61%
C 9.33%
D 5.17%
E 2.58%

EXPECTED INTEREST RATE Lloyd Corporation’s 14%
coupon rate, semiannual payment, $1,000 par value bonds, which
mature in 30 years, are callable 5 years from today at $1,050. They
sell at a price of $1,353 54, and the yield curve is flat. Assume
that interest rates are expected to remain at their current
level.
a. What is the best estimate of these bonds’ remaining
life?
b. If Lloyd plans to raise additional capital and
wants to use debt financing, what coupon...

Absalom Motors' 15% coupon rate, semiannual payment, $1,000 par
value bonds that mature in 25 years are callable 4 years from now
at a price of $750. The bonds sell at a price of $1,300, and the
yield curve is flat. Assuming that interest rates in the economy
are expected to remain at their current level, what is the best
estimate of the nominal interest rate on new bonds? Do not round
intermediate calculations. Round your answer to two decimal...

A 9% coupon rate, semiannual payment, $1,000 par value bonds
that mature in 25 years. Coupon payments are paid on January 01 and
July 01 every year. You purchased the bond on September 01 and
received an invoice price of $950. What is the quoted price on
September 01?

A 9.6% coupon rate, semiannual payment, $1,000 par value bonds
that mature in 25 years. Coupon payments are paid on January 01 and
July 01 every year. You purchased the bond on August 01 and
received an invoice price of $965. What is the quoted price on
August 01? (Do not use the dollar sign ($))

Ten years ago the Templeton Company issued 29-year bonds with an
10% annual coupon rate at their $1,000 par value. The bonds had an
9% call premium, with 5 years of call protection. Today Templeton
called the bonds.
Compute the realized rate of return for an investor who
purchased the bonds when they were issued and held them until they
were called. Round your answer to two decimal places.
%
Why the investor should or should not be happy that...

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