Finance questions for waleedbravo, document attached.
bdkell
finance_1.docx_.3.docx1.A bond that matures in 14 years has a $1,000.00 par value. The annual coupon rate is 9% and the markets required yield to maturity on a comparable risk bond is 13%.
a) The value of the bond if it paid interest annually would be $______(round to nearest cent)
b) The value of the bond if it paid interest semiannually would be $_____ ( round to nearest cent)
2.XYZ, Inc. is issuing bonds that will mature in 20 years with an annual coupon rate of 12%. Their par value will be $1,000.00 and the interest will be paid semiannually. XYZ is hoping to get a AA rating on it bonds and, if it does, the yield to maturity on similar AA bonds is 8.5%. If they receive an A rating , the yield to maturity on similar A bonds is 9.5%.
a) What will be the price of the bond if they receive a AA rating $______(round to nearest cent)
b) What will be the price of the bond if they receive a A rating $______(round to nearest cent)
3.Seven years ago ABC Corp. issues some 28 year zero coupon bonds that were priced with a market’s required yield to maturity of 15% and a par value of $1,000.00.
a)What did these bonds sell or when they were issued $______(round to nearest cent)
c)If the market’s required yield to maturity had fallen to 13%, what would they have been selling for$_______ (round to nearest cent)
4.A bond of ABC Corp. pays $100.00 in annual interest, with a $1,000.00 par value. The bonds mature in 30 years. The markets required yield to maturity on a comparable risk bond is 9%.
a) What is the value of the bond if the market’s required yield to maturity on a comparable risk bond is 9%. $_________ (round to nearest cent)
b)What is the value of the bond if the market’s required yield to maturity on a comparable risk bond increases to 14%. $_________( round to nearest cent) and if bonds required yield to maturity decreases to 4%.$______( round to nearest cent)
