Question

Blossom, Inc., has issued a three-year bond that pays a coupon rate of 7.8 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.2 percent, what is the market value of the bond? (Round answer to 2 decimal places, e.g. 15.25.)

Answer #1

It is assumed that the Face Value of the bond is $1,000.

Market value = $1,100.49 calculated using PV function of Excel as follows:

Knight, Inc., has issued a three-year bond that pays a coupon
rate of 4.84 percent. Coupon payments are made semiannually. Given
the market rate of interest of 3.56 percent, what is the market
value of the bond? (Round answer to 2 decimal places,
e.g. 15.25.)

2. Knight, Inc., has issued a three-year bond that pays a coupon
of 8.00 percent. Coupon payments are made semiannually. Given the
market rate of interest of 4.90 percent, what is the market value
of the bond? (Round answer to 2 decimal places, e.g. 15.25.)

Please answer the 8 questions. Thank you!
1. Cullumber, Inc., has issued a three-year bond that pays a
coupon rate of 9.4 percent. Coupon payments are made semiannually.
Given the market rate of interest of 4.0 percent, what is the
market value of the bond? Round answer to 2 decimal places
2. Ten-year zero coupon bonds issued by the U.S. Treasury have a
face value of $1,000 and interest is compounded semiannually. If
similar bonds in the market yield 11.6...

Blossom Information Systems management is planning to issue
10-year bonds. The going market yield for such bonds is 8.130
percent. Assume that coupon payments will be made semiannually.
Management is trying to decide between issuing an 8 percent coupon
bond or a zero coupon bond. Blossom needs to raise $1 million.
Collapse question part (a1) What will be the price of an 8 percent
coupon bond? (Round answer to 2 decimal places, e.g 15.25.)

Oriole Corp is issuing a 10-year bond with a coupon rate of 9
percent. The interest rate for similar bonds is currently 7
percent. Assuming annual payments, what is the value of the bond?
(Round answer to 2 decimal places, e.g.
15.25.)

1. BA Corp is issuing a 10-year bond with a coupon rate of 7.19
percent. The interest rate for similar bonds is currently 4.70
percent. Assuming annual payments, what is the value of the bond?
(Round answer to 2 decimal places, e.g. 15.25.)

You are interested in investing in a five-year bond that pays 7.8
percent coupon with interest to be received semiannually. Your
required rate of return is 8.4 percent. What is the most you would
be willing to pay for this bond?

New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 11 percent that can be called in one year.
The bond makes annual coupon payments and has a par value of
$1,000. The call premium is set at $165 over par value. There is a
60 percent chance that the interest rate in one year will be 13
percent, and a 40 percent chance that the interest rate will be 8
percent. If the current interest...

New Business Ventures, Inc., has an outstanding perpetual bond
with a coupon rate of 11 percent that can be called in one year.
The bond makes annual coupon payments. The call premium is set at
$115 over par value. There is a 60 percent chance that the interest
rate in one year will be 13 percent, and a 40 percent chance that
the interest rate will be 8 percent. If the current interest rate
is 11 percent, what is the...

Gugenheim, Inc., has a bond outstanding with a coupon rate of
7.8 percent and annual payments. The yield to maturity is 9 percent
and the bond matures in 16 years. What is the market price if the
bond has a par value of $2,000?
$1,800.50
$1,836.51
$1,803.27
$1,805.64

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