Question

General Mills has a $1,000 par value, 10-year to maturity bond outstanding with an annual coupon rate of 7.89 percent per year, paid semiannually. Market interest rates on similar bonds are 11.30 percent. Calculate the bond’s price today.

Answer #1

Face Value = $1,000

Annual Coupon Rate = 7.89%

Semiannual Coupon Rate = 3.945%

Semiannual Coupon = 3.945% * $1,000 = $39.45

Time to Maturity = 10 years

Semiannual Period to Maturity = 20

Annual Interest Rate = 11.30%

Semiannual Interest Rate = 5.65%

Current Price = $39.45 * PVIFA(5.65%, 20) + $1,000 * PVIF(5.65%,
20)

Current Price = $39.45 * (1 - (1/1.0565)^20) / 0.0565 + $1,000 /
1.0565^20

Current Price = $39.45 * 11.80306 + $1,000 * 0.3331

Current Price = $798.73

So, current market price is $798.73

Boeing has a bond outstanding with 15 years to maturity, a
$1,000 par value, a coupon rate of 6.8%, with coupons paid
semiannually, and a price of 98.16 (percent of par).
If the company wants to issue a new bond with the same
maturity at par, what coupon rate should it choose?

BP has a bond outstanding with 15 years to maturity, a $1,000
par value, a coupon rate of 6.8%, with coupons paid semiannually,
and a price of 91.25 (percent of par).
What is the cost of debt?

A bond has a $1,000 par value, 10 years to maturity, and pays a
coupon of 7.0% per year, semiannually. You expect the bond’s yield
to maturity to decrease to 6.5% per year in two years. If you buy
the bond today for $987.75 and sell it in two years, what is the
annual return on your investment?
Question 9 options:
A)
9.42%
B)
9.12%
C)
8.96%
D)
8.74%
E)
9.04%

Milner's Tools has a 9-year, 7 percent annual coupon bond
outstanding with a $1,000 par value. Carter's Tools has a 10-year,
6 percent annual coupon bond with a $1,000 par value. Both bonds
currently have a yield to maturity of 6.5 percent. If the market
yield increases to 6.75 percent,
(1) What is the percentage change in Milner’s bond value?
(2) What is the percentage change in Carter’s bond value?
(3) Whose bond has higher interest rate risk? Why?

Consider the following semi-annual coupon bond: $1,000 par
value; 5 years until maturity; 7% coupon rate; YTM of 6%. Calculate
the bond’s price today. NOTE: This is a coupon bond.
Please show all work

our firm has a 7-year, RM 1,000 par outstanding bond with an
8.25 percent annual coupon. The current yield to maturity is 7.1
percent. The bond can be called in three years at a call price of
RM 1,020. Assume there will be no change in the term structure of
interest rates, what is the estimated yield to call of this
bond?

a) Johnson Motors’ bonds have 10 years remaining to maturity.
Coupon interest is paid annually, the bonds have a $1,000 par
value, and the coupon rate is 7 percent. The bonds have a yield to
maturity of 8 percent. What is the current market price of these
bonds?
b) BSW Corporation has a bond issue outstanding with an annual
coupon rate of 7 percent paid semiannually and four years remaining
until maturity. The par value of the bond is $1,000....

(Bond valuation) A bond that matures in
10years has a $1,000
par value. The annual coupon interest rate is 9
percent and the? market's required yield to maturity on a?
comparable-risk bond is 15
percent. What would be the value of this bond if it paid
interest? annually? What would be the value of this bond if it paid
interest? semiannually?

Find the yield to maturity for a 15-year, 8% annual coupon rate,
$1,000 par value bond if the bond sells for $1,218 currently? We
assume that interest is paid on this bond annually.
2.90%
5.79%
6.64%
6.86%
Using the information from above, calculate the bond’s current
yield.
6.20%
6.57%
6.80%
7.18%
Using the information from Question 43 and 44, calculate the
bond’s capital gain yield.
-0.78%
0.78%
6.22%
6.57%

Aurora Hops, Inc. has a bond outstanding that has a $1,000 par
value and a market price of $770.60. The bond has 10 years
remaining to maturity. Assuming an annual market interest rate of
12% and that the bond pays interest semiannually, calculate the
ANNUAL coupon rate on the bond. (Round to nearest DOLLAR for your
payment and round to the nearest whole percentage for the
rate).

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