Question

(a) Consider a 14-year, 9.5% corporate bond with face value $10,000. Assume that the bond pays semi-annual coupons. Compute the fair value of the bond today if the nominal yield-to-maturity is 11% compounded semi-annually.

(b) Consider a 11-year, corporate bond with face value $1,000 that pays semi-annual coupon. With the nominal yield-to-maturity equal to 10%, the bond is selling at $802.5550. Find the coupon rate for this bond. Assume that the market is in equilibrium so that the fair value of the bond is equal to the market price of the bond.

(c) Consider a 4-year, 5% annual coupon bond with a face value of $10,000, which was issued three years ago. The bond just paid the coupon. Therefore, this bond has one year to maturity, and the next payment of the face and coupon will be made in exactly one year, after which the bond will cease to exist. If the bond defaults before next year, it will pay total of $8,000 in one year. The effective 1-year risk-free rate is 3.55%. If the bond is currently selling at $9,501.50, compute the risk-neutral probability that the bond will default within one year.

Answer #1

a)

Consider a 14-year, 9.5% corporate bond with face value $10,000.
Assume that the bond pays semi-annual coupons. Compute the fair
value of the bond today if the nominal yield-to-maturity is 11%
compounded semi-annually. Please show working

) Consider a 4-year, 5% annual coupon bond with a face value of
$10,000, which was issued three years ago. The bond just paid the
coupon. Therefore, this bond has one year to maturity, and the next
payment of the face and coupon will be made in exactly one year,
after which the bond will cease to exist. If the bond defaults
before next year, it will pay total of $8,000 in one year. The
effective 1-year risk-free rate is...

Consider a 4-year, 5% annual coupon
bond with a face value of $10,000, which was issued three years
ago. The bond just paid the coupon. Therefore, this bond has one
year to maturity, and the next payment of the face and coupon will
be made in exactly one year, after which the bond will cease to
exist. If the bond defaults before next year, it will pay total of
$8,000 in one year. The effective 1-year risk-free rate is 3.55%....

A five-year corporate bond with a face value of $10,000 pays
interest at a coupon rate of 5.0%. The required return for
investing in this bond is 4.0%. At what market price will the bond
sell if the interest is paid semi-annually?

Consider a coupon bond that has a face value of $1000, has a
yield of 16%,
pays a semi annual coupon of 70, and matures in one year. Assuming
that the
bond will pay the face value amount that the cost coupon payment on
the
maturity date. Calculate the price of the bond.

Acme Inc. just issued a bond with a $10,000 face value and a
coupon rate of 7%. If the bond has a life of 30 years, pays
semi−annual coupons, and the yield to maturity is 9%, what will
the bond sell for?

Bond A pays annual coupons pays ins next coupon in one year,
matures in 23 years and has a face value of one thousand. Bond B
pays semi annual coupons pays its next coupon in six months,
matures in three years and has a face value of one thousand. The
two bonds have the same yield to maturity. Bond A has a coupon rate
of 7.70 percent and is priced at $736.19. Bond B has a coupon rate
of 6.40...

A 10-year bond pays interest of $ 27.40 semiannually, has a face
value of $ 1,000, and is selling for $ 720.47. What are its annual
coupon rate and yield to maturity?
The annual coupon rate is _____%.
(Round to two decimal places).
The yield to maturity is ______ %.
(Round to two decimal places).

A 10-year bond pays interest of $27.10 semiannually, has a
face value of $1,000, and is selling for $786.13.What are its
annual coupon rate and yield tomaturity?

Consider a 6-year, $1,000 par bond that pays semi-annual
coupon. Its yield to maturity is 7% and is selling for $1,095.452?
Find the coupon rate of this bond.

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