Best estimate of these bonds remaining life

Assignment Help Financial Management

Reference no: EM131990865

1. Lourdes Corporation's 12% coupon rate, semiannual payment, $1,000 par value bonds, which mature in 10 years, are callable 6 years from today at $1,050. They sell at a price of $1,306.57, and the yield curve is flat. Assume that interest rates are expected to remain at their current level.

What is the best estimate of these bonds' remaining life? Round your answer to two decimal places.

If Lourdes plans to raise additional capital and wants to use debt financing, what coupon rate would it have to set in order to issue new bonds at par?

Since interest rates have risen since the bond was first issued, the coupon rate should be set at a rate above the current coupon rate.

Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTC.

Since the bonds are selling at a premium, the coupon rate should be set at the going rate, which is the YTM.

Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as that on the existing bonds. Since Lourdes wishes to issue new bonds at par value, the coupon rate set should be the same as the current yield on the existing bonds.

2. firm's bonds have a maturity of 14 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 7 years at $1,244, and currently sell at a price of $1,418.87.

What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places

What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM131990865

Questions Cloud

Realignment process that will yield interest rate parity : Briefly discuss the realignment process that will yield interest rate parity.

The implementation of the training or conference : Examine the training objectives that led to the implementation of the training or conference you have chosen.

Exchange rate to make speculative profit : How will this bank attempt to capitalize on this expected change in exchange rate to make a speculative profit? Estimate the profit

What are organizations do to protect themselves from crisis : What are organizations doing to protect themselves from crisis that affects their critical technological resources? The response must be typed.

Best estimate of these bonds remaining life : What is the best estimate of these bonds' remaining life? What is their nominal yield to maturity?

Provide a review of each of tuckmans five stages of group : Provide a review of each of Tuckman's five stages of group formation and identify what stage(s) are evident in the case. Explain your answer.

Analyse management strategies and operational activities : PPMP20013 - Project Management for Operators of Large Assets - developing a tender request as the principal for a project in the mining

Explain why an npo needs a board of directors : Explain why an NPO needs a board of directors. Explain why an NPO should or should not exist when for-profit or government agencies provide a similar service.

Compute the discounted payback period for project : Compute the discounted payback period for a project with the following cash flows received uniformly within each year and with a required return of 8%:

User Account

All Pages