On 4 February 2010 a company issued a bond with a face value of $500,000 that matures exactly 25 years later. The coupon rate is 8% p.a. compounded half-yearly. What is the bond's value on 4 February 2018 assuming the market yield is 5% p.a. compounded half-yearly. a. $361,916.02 b. $669,110.99 c. $670,428.40 d. $602,841.48 e. $454,475.73

On 4 February 2010 a company issued a bond with a face value of $500,000 that matures exactly 25 years later. The coupon rate is 8% p.a. compounded half-yearly. What is the bond's value on 4 February 2018 assuming the market yield is 5% p.a. compounded half-yearly. a. $361,916.02 b. $669,110.99 c. $670,428.40 d. $602,841.48 e. $454,475.73

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?
Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the market rate was 6%. Interest was paid semi-annually. Calculate and explain the timing of the cash flows the purchaser of the bonds (the investor) will receive throughout the bond term. Would an investor be willing to pay more or less than face value for this bond?
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?