If the contract rate on the bond is 13% and the market interest rate at the time of sale is 13.2%, then the bond will sell at:
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- If the market rate of interest is 15 percent and the bond interest rate is 10%, the bonds will sell at a _______________. If a bonds interest rate is 10 % and the market rate is 8 %, the bonds will sell at a ______________. In computing the carrying amount of a bond, unamortized _____________ is subtracted from the face value of the bond. In computing the carrying amount of a bond, unamortized _______ is added to the face value of the bond. If a bond sells at a _____________, an amount more than the face value of the bond is received on the date of issuance. If a bond sells at a ____________, an amount less than the face value of the bond is received on the date of issuance.Complete the below table to calculate the price of a $1.0 million bond issue under each of the following independent assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1):1. Maturity 12 years, interest paid annually, stated rate 10%, effective (market) rate 12%.2. Maturity 9 years, interest paid semiannually, stated rate 10%, effective (market) rate 12%.3. Maturity 8 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.4. Maturity 10 years, interest paid semiannually, stated rate 12%, effective (market) rate 10%.5. Maturity 15 years, interest paid semiannually, stated rate 12%, effective (market) rate 12%.Please see attached. Definitions: Callable bond is a bond that the issuer has the right to buy back prior to maturity at a predetermined price. Coupon rate is the interest rate for the bond coupons, expressed in annual percentage terms. Yield to call is the discount rate (return) for a callable premium bond.
- d is listed in & newspaper at a bid of 105.4844. This quote should be Interpreted to mean: e bond will pay semiannual interest payments of $105.4844 per $1,000 of face value. can 'euyuwt bond at a price equal to 105.4844 percent of face value. sellthat bond at a price equal to 1054844 percent of face value. il pay annual interest payments of $105 4844 per $1000 of face value. s willng to sell that bond for a price equal to 105.4844 percent of par.If a P1,000 bond sells for P1,125, which of the following statements are correct? I. The market rate of interest is greater than the coupon rate on the bond. II. The coupon rate on the bond is greater than the market rate of interest. III. The coupon rate and the market rate are equal. IV. The bond sells at a premium. V. The bond sells at a discount. a. I and IV b. I and V c. II and IV d. II and VThe tables below show, respectively, the characteristics of two annual-pay bonds from the same issuer with the same priority in the event of default, and spot interest rates. Neither bond’s price is consistent with the spot rates. Using the information in these tables, recommend either bond A or bond B for purchase. Bond Characteristics Bond A Bond B Coupons Annual Annual Maturity 3 years 3 years Coupon rate 10% 6% Yield to maturity 10.65% 10.75% Price 98.40 88.34 Spot Interest Rates Term (Years) Spot Rates (Zero-Coupon) 1 5% 2 8 3…
- Compute the Macaulay duration under the following conditions: a. A bond with a four-year term to maturity, a 10 percent coupon (annual payments), and a market yield of 8 percent. b. A bond with a four-year term to maturity, a 10 percent coupon (annual payments), and a market yield of 12 percent. c. Compare your answers to parts (a) and (b), and discuss the implications of this for classical immunization.The bid price for a bond quote is: Answer a. Fixed over the life of a bond b. The price at which the bond dealer is willing to purchase the bond c. The price at which the bond dealer is willing to sell the bond d. Determined solely by the time left to maturityFrom page 9-2 of the VLN, what is the first thing you want to identify when approaching a bond problem? Group of answer choices A. Annual bond or semiannual bond B. Whether the market rate is different from the stated rate. C. The cash flows provided by the bond. D. The company's debt to equity ratio.
- Consider an A-rated bond and a B-rated bond. Assume that the one-year probabilities of default for the A- and B-rated bonds are 1% and 3%, respectively, and that default correlation between the two bonds is 20%. What is the joint probability of default of the two bonds?The bid price for a bond quote is: a. Fixed over the life of a bond b. The price at which the bond dealer is willing to purchase the bond c. The price at which the bond dealer is willing to sell the bond d. Determined solely by the time left to maturityIf the YTM on the following bonds are identical except, what is the price of bond B? Bond A Bond B Face value $1,000 $1,000 Semiannual coupon $45 $35 Years to maturity 20 20 Price $1,098.96 ?