Question

#3) Seven years ago, Crane Corporation issued 20-year bonds that
had a $1,000 face value, paid interest annually, and had a coupon
rate of 8 percent. If the market rate of interest is 4.0 percent
today, what is the current market price of an Crane Corporation
bond? **(Round intermediate calculations to 5 decimal
places, e.g. 1.25145 and final answer to 2 decimal places, e.g.
52.75.)**

Answer #1

Bonds are financial instruments that provide fixed returns to their holders. Bonds actually have a nature of debt with a fixed interest rate and a maturity, also known as Plain Vanilla Bond.

The Price of a bond can be calculated as:

Where *C* denotes the Coupon Amount or 8% of $ 1,000 = $
80

*r* denotes the Yield to Maturity or 4%

*n* denotes the Time to Maturity or 13

Substituting the values, calculate the *Price*:

Thus, the current price of the Bond is **$
1,399.43**

7 years ago Carla Vista Corporation issued 20-year bonds that
had a $1,000 face value, paid interest annually, and had a coupon
rate of 6 percent. If the market rate of interest is 5.5 percent
today, what is the current market price of an Carla Vista
Corporation bond? (Round intermediate calculations to 5 decimal
places, e.g. 1.25145 and final answer to 2 decimal places, e.g.
52.75.)

7 years ago Eastern Corporation issued 20-year bonds that had a
$1,100 face value, paid interest annually, and had a coupon rate of
7 percent. If the market rate of interest is 5.5 percent today,
what is the current market price of an Eastern Corporation
bond?

Joseph Moore bought 10-year, 10.3 percent coupon bonds issued by
the U.S. Treasury three years ago at $912.31. If he sells these
bonds, for which he paid the face value of $1,000, at the current
price of $838.06, what is his realized yield on the bonds? Assume
similar coupon-paying bonds make annual coupon payments.
(Round intermediate calculations to 5 decimal places,
e.g. 1.25145 and final answer to 2 decimal places, e.g.
15.25%.)

Fibbo, Inc. issued one year ago annual coupon paying bonds that
orignially had 13 years to maturity. These bonds have a face value
of $1,000 and a current market value of $1,030. At this market
value, the bonds have a yield-to-maturity of 4.14% What is the
coupon rate for these bonds? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)

a. Several years ago, Castles in the Sand Inc. issued bonds at
face value of $1,000 at a yield to maturity of 6%. Now, with 6
years left until the maturity of the bonds, the company has run
into hard times and the yield to maturity on the bonds has
increased to 11%. What is the price of the bond now? (Assume
semiannual coupon payments.) (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Bond Price:
b....

a. Several years ago, Castles in the Sand Inc. issued bonds at
face value of $1,000 at a yield to maturity of 6.6%. Now, with 6
years left until the maturity of the bonds, the company has run
into hard times and the yield to maturity on the bonds has
increased to 13%. What is the price of the bond now? (Assume
semiannual coupon payments.) (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
b. Suppose that...

a. Several years ago, Castles in the Sand Inc. issued bonds at
face value of $1,000 at a yield to maturity of 5%. Now, with 5
years left until the maturity of the bonds, the company has run
into hard times and the yield to maturity on the bonds has
increased to 10%. What is the price of the bond now? (Assume
semiannual coupon payments.) (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
b. Suppose that...

JamesBond Corporation issued 10-year bonds two years ago. The
coupon rate on these bonds is 7.5 percent. The bonds make
semiannual coupon payments. Today you can buy each of these bonds
for 105 percent of par value. Calculate the YTM. (Do not round
intermediate calculations. Enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)

The Churchill Company issued a 25-year bond five years ago with
a face value of $1,000. The bond pays interest semiannually at a
10% annual rate.
Questions: Show all calculations
What is the bond's price today if the coupon rate on comparable
new issues is 12%?
What is the price today if the coupon rate on comparable bonds
declines to 8%?
Explain the results of parts a) and b) in terms of opportunities
available to
investors. Specifically, comment on the...

One year ago, the ABC company issued 20-year bonds at par. The
bonds have a coupon rate of 5 percent and pay interest annually.
Today, the market rate of interest on these bonds is 5.6 percent.
How does today’s price of this bond compare to the issue price?
(Answer the percent price change)

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