Question

Question 5

**Bond Features**

Face Value = $1,000

Coupon Rate = 5.00%

Maturity in Years = 10

Annual Coupons

The bond can be called in year 6

The market interest rate in year 6 = 3.00%

The call price is equal to $1,050

How much would the company save or lose if it calls the bond in
year 6 ?

save $22.64 |

save $24.34 |

save $25.32 |

save $23.61 |

save $25.07 |

Answer #1

LO3
Bond Features
Maturity (years)
5
Face Value =
$1,000
Coupon Rate =
3.00%
Coupon dates (Annual)
Market interest rate today
3.00%
Time to call (years)
3
Price if Called
$1,030.00
Market interest rate in Year 3
1.00%
The above bond is callable in 3 years. When the bond is issued
today, interest rates are 3.00% . In 3 years, the market interest
rate is 1.00% . Should the firm call back the bonds in year 3 and
if so,...

Use the bond term's below to answer the question
Maturity 12 years
Coupon Rate 7%
Face value $1,000
Annual Coupons
The bond is callable in year 6
The call price is $1,050
The interest rate in period 3 is 9%
If the firm calls back the bond, how much does it save or lose?
-$147
-$127
-$153
-$140
-$133

Bond Features
Maturity (years) =
3
Face Value =
$1,000
YTM =
3.00%
Coupon Rate =
5.00%
Coupon dates (Annual)
What is the current yield on the above bond
between today and year 1?

1.
You own a bond with the following features:
Face value of $1000,
Coupon rate of 3% (annual)
12 years to maturity.
The bond is callable after 7 years with the call price of
$1,063.
If the market interest rate is 4.27% in 7 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)...

1.What is the price of a bond with the following features?
Face Value = $1,000
Coupon Rate = 7% (stated as an ANNUAL rate)
Semiannual coupon payments
Maturity = 7 years
YTM = 6.34% (Stated as an APR)
State your answer to the nearest penny (e.g., 984.25)
2.
You own a bond with the following features:
Face value of $1000,
Coupon rate of 4% (annual)
11 years to maturity.
The bond is callable after 7 years with...

A.
You own a bond with the following features:
Face value of $1000,
Coupon rate of 5% (annual)
11 years to maturity.
The bond is callable after 6 years with the call price of
$1,056.
If the market interest rate is 4.71% in 6 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)...

A.
You own a bond with the following features:
Face value of $1000, Coupon rate of 5% (annual) 8 years to
maturity. The bond is callable after 4 years with the call price of
$1,058.
If the market interest rate is 4.17% in 4 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond? State your answer to the nearest penny
(e.g., 84.25). If there...

You own a bond with the following features: Face value of $1000,
Coupon rate of 4% (annual) 11 years to maturity. The bond is
callable after 2 years with the call price of $1,073. If the market
interest rate is 4.86% in 2 years when the bond can be called, if
the firm calls the bond, how much will it save or lose by calling
the bond? State your answer to the nearest penny (e.g., 84.25) If
there would be...

You own a bond with the following features: Face value of $1000,
Coupon rate of 4% (annual) 9 years to maturity. The bond is
callable after 1 years with the call price of $1,065. If the market
interest rate is 4.43% in 1 years when the bond can be called, if
the firm calls the bond, how much will it save or lose by calling
the bond? State your answer to the nearest penny (e.g., 84.25) If
there would be...

You own a bond with the following features: Face value of $1000,
Coupon rate of 4% (annual) 14 years to maturity. The bond is
callable after 3 years with the call price of $1,075. If the market
interest rate is 4.68% in 3 years when the bond can be called, if
the firm calls the bond, how much will it save or lose by calling
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