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- Bond X has a 10% annual coupon, while Bond Y has a 8% annual coupon. Both bonds have the same maturity, a face value of $1,000, an 9% yield to maturity, and are noncallable. Which of the following statements is CORRECT? options: a) Bond X's capital gains yield is greater than Bond Y's capital gains yield. b) Bond X trades at a discount, whereas Bond Y trades at a premium. c) If the yield to maturity for both bonds immediately decreases to 7%, Bond X's bond will have a larger percentage increase in value. d) Bond X's current yield is greater than that of Bond Y. e) If the yield to maturity for both bonds remains at 9%, Bond X's price one year from now will be higher than it is today, but Bond Y's price one year from now will be lower than it is today.Fooling Company has a callable bond outstanding with a coupon of 10.8 percent, 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 105 percent of par value? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)Find the current yield (as a %) of a bond whose coupon rate is listed as 4.375 and currently selling at a premium of 104.375. Round to the nearest tenth percent.
- Find the current yield as a percent of a bond, whose coupon rate is listed as 8.875 and currently selling at a premium of 108.875. Round to the nearest tenth percent.A convertible bond has a par value of $1,000 and a conversion price of $40. The stockcurrently trades for $30 a share. What are the bond’s conversion ratio and conversionvalue at t =0?ABC Companv has a $1.000 par value bond that currentlv sells tor $850. The coupon rate of the bond is 9% and the pavment is made annualv. If the bond has a maturitv of 10 vears. what is the current required rate of return (TM)on the bond?
- What is the yield to maturity on a 10-year, 9%annual coupon, $1,000 par value bond that sellsfor $887.00? That sells for $1,134.20? What does the fact that a bond sells at a discount orat a premium tell you about the relationshipbetween rdand the bond’s coupon rate?Apel Investment Company has GH¢1,800,000 of interest-bearing bond outstanding. Theoutstanding bonds have a 11% coupon and a 14% yield to maturity. Management believesthey could issue new bonds at a premium of 105% that would provide a similar yield tomaturity. Also, the company’s prepared stock currently stands at GH¢1,200,000 and tradesat GH¢60.00 per share. The company pays a dividend of GH¢3.00 per share. Furthermore,the company’s common stock sells for GH¢15.00 per share with 200,000 shares in issue.The company has a beta of 1.2, whiles the government’s T-Bill has an interest rate of 12%,with a 18% average return on the market. The company’s marginal tax rate is 40%.Management is considering investing in a new project, the details of which are as follows:GH¢Project cost 2,000,000.00Estimated net profit:Year 1 (22,000.00)Year 2 192,000.00Year 3 300,000.00Year 4 270,000.00Year 5 180,000.00Additional information; Depreciation is based on the straight line method. The estimated…Apel Investment Company has GH¢1,800,000 of interest-bearing bond outstanding. Theoutstanding bonds have a 11% coupon and a 14% yield to maturity. Management believesthey could issue new bonds at a premium of 105% that would provide a similar yield tomaturity. Also, the company’s prepared stock currently stands at GH¢1,200,000 and tradesat GH¢60.00 per share. The company pays a dividend of GH¢3.00 per share. Furthermore,the company’s common stock sells for GH¢15.00 per share with 200,000 shares in issue.The company has a beta of 1.2, whiles the government’s T-Bill has an interest rate of 12%,with a 18% average return on the market. The company’s marginal tax rate is 40%.Management is considering investing in a new project, the details of which are as follows:GH¢Project cost 2,000,000.00Estimated net profit:Year 1 (22,000.00)Year 2 192,000.00Year 3 300,000.00Year 4 270,000.00Year 5 180,000.00Additional information; Depreciation is based on the straight line method. The estimated…
- Whatever, Inc., has a bond outstanding with a coupon rate of 5.75 percent and semiannual payments. The yield to maturity is 4.7 percent and the bond matures in 22 years. What is the market price if the bond has a par value of $1,000? Multiple Choice $1,165.87 $1,142.07 $1,146.28 $1,143.01 $1,144.77Suppose a seven-year, $1,000 bond with a 11.53% coupon rate and semiannual coupons is trading with a yield to maturity of 9.06%. Is this bond currently trading at a discount, at par, or at a premuim? Explain. The bond is currently trading... (Select the best choice below.) A.... at a discount because the coupon rate is greater than the yield to maturity B.... at a premium because the yield to maturity is greater than the coupon rate C.... at par because the coupon rate is equal to the yield to maturity D.... at a premium because the coupon rate is greater than the yield to maturity 2. If the yield to maturity of the bond rises to 9.85% (APR with semiannual compounding), at what price will the bond trade?A bond for the Chelle Corporation has the following characteristics: Maturity - 12 years Coupon - 10% YTM - 9.5% Macaulay duration - 5.7 years Convexity – 48 Noncallabe Calculate the approximate price change for this bond using both duration and convexity in the computation, one again assuming that its yield to maturity decline by 300 basis points.