BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the bond?
BA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the
Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond?
Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond?
Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she expect to earn?
Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of 6 percent and make semiannual coupon payments. What is the current market yield on this bond?
Macy’s is planning a store expansion by issuing 10-year coupon bond that makes semi-annual coupon payments at a rate of 5.875% with a face value of $1,000. Assuming semi-annual compounding, what will be the price of these bonds, if the appropriate yield to maturity (discount rate) is 14%?
Carrie wants to invest in five-year bonds that are currently priced at $872.48. These bonds have a coupon rate of 6% and make semiannual coupon payments. What is the current market yield of this bond?
- What is the current market yield of this bond?
- Is the bond trading at a premium or discount? Explain.
ConEdison Utility Company has four-year bonds outstanding that pay a coupon rate of 6.6% and make coupon payments semiannually. If these bonds are selling at $918.39, what is the yield to maturity that an investor can expect to earn on these bonds?
Sprint has issued bonds that will mature in six years and pay an 8% coupon semiannually. If you paid $1,051.98 today and your required return was 6.6%, did you overpay? underpay? Or pay the fair price? Explain.
. In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue, the bonds sold at par. Today, bonds of similar risk and maturity must pay an annual coupon of 7.25% to sell at par value. Assuming semi-annual payments and a 7.25% yield to maturity, what is the current price of the firm’s bonds?
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