Question

A few years ago, Spider Web, Inc. issued bonds with a 12.26 percent annual coupon rate, paid semiannually. The bonds have a par value of $1,000, a current price of $700, and will mature in 12 years. What would the annual yield to maturity be on the bond if you purchased the bond today?

Flower Valley Company Bonds have a 13.91 percent coupon rate. Interest is paid semiannually. The bonds have a par value of $1000 and will mature in 10 years from now. Compute the value of Flower Valley Company bonds if investors required rate of return is 8.68 percent.

Answer #1

2. Use RATE function in EXCEL to find the yield to maturity.

=RATE (nper,pmt,pv,fv,type)

Please remember that the payments are semi annual

nper=12 years*2=24

pmt=semi annual coupon=(coupon rate*face value)/2=(12.26%*1000)/2=122.6/2=61.3

pv=current price=700

fv=face value=1000

=RATE (24,61.3,-700,1000,0)=9.293%

Annual yield to maturity=2*9.293%=18.59%

2. Use PV function in EXCEL to find the price of the bond

=PV(rate,nper,pmt,fv,type)

rate=8.68%/2=4.34%

nper=10 years*2=20

pmt=(13.91%*1000)/2=139.1/2=69.55

fv=1000

=PV(4.34%,20,69.55,1000,0)=$1344.92

Price of the bond=$1344.92

Flower Valley Company bonds have a 10.91 percent coupon rate.
Interest is paid semiannually. The bonds have a par value of $1,000
and will mature 24 years from now. Compute the value of Flower
Valley Company bonds if investors’ required rate of return is 9.27
percent

Flower Valley Company bonds have a 10.36 percent coupon rate.
Interest is paid semiannually. The bonds have a par value of $1,000
and will mature 28 years from now. Compute the value of Flower
Valley Company bonds if investors’ required rate of return is 11.44
percent. Round the answer to two decimal places.

Flower Valley Company bonds have a 14.87 percent coupon rate.
Interest is paid semiannually. The bonds have a par value of $1,000
and will mature in 5 years from now. Compute the value of Flower
Valley Company bonds if investors’ required rate of return is 9.39
percent. Round the answer to two decimal places.

Enterprise, Inc. bonds have an annual coupon rate of 16 percent.
The interest is paid semiannually and the bonds mature in 11 years.
Their par value is $1,000. If the market's required yield to
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The value of the enterprise bonds if the interest is paid
semiannually is $(___). (round to the nearest cent).

1. West Corp. issued 15-year bonds two years ago at a coupon
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(Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
YTM = %
2.
Even though most corporate bonds in the United States make coupon
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a. if the interest is paid semiannually, the value of the bond
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a. If the interest is paid semiannually, the
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$ .
(Round to the nearest cent.)
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Chubb Co. issued 8-year bonds two years ago at a coupon rate of
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