Four different bond rating categories

Assignment Help Financial Management

Reference no: EM13927992

The yield to maturity for 15-year bonds is as follows for four different bond rating categories. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Aaa 8.60%

Aa1 8.80%

Aa2 9.00%

Aa3 10.00%

The bonds of Falter Corporation were rated as Aa1 and issued at par a few weeks ago. The bonds have just received a new rating of Aa3. Determine the new price of the bonds, assuming a 15-year maturity and semi annual interest payments

Reference no: EM13927992

Questions Cloud

Considering purchasing an outstanding bond : Today is January 1, 2009 and you are considering purchasing an outstanding bond that was issued on January 1, 2007. It has a 9.5% annual coupon and originally had a 30-year maturity. (They mature on December 31, 2036.) The bonds can be called for 5 y..

Bonds are identical except for coupon and price : If the following bonds are identical except for coupon and price, what is the coupon of bond B?

What should be the initial price of the bond : A 16-year, $1,000 par value zero-coupon rate bond is to be issued to yield 6 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. What should be the initial price of the..

Same expected return and the same standard deviation : Stock ABC and Stock XYZ have the same current price of $50, and they offer the same distribution of future returns (with the same expected return and the same standard deviation). There exists a call option on one share of Stock ABC and a call option..

Four different bond rating categories : The yield to maturity for 15-year bonds is as follows for four different bond rating categories. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

How the use of a family limited partnership : Explain and discuss how the use of a family limited partnership or limited liability company could be used for estate planning, including their use in valuation of the assets.

Dividend on its stock-what is the current share price : Bui Corp. pays a constant $14.50 dividend on its stock. The company will maintain this dividend for the next eight years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price..

Journalize the transactions and closing entry for net income : The stockholders’ equity accounts of Castle Corporation on January 1, 2015, were as follows. Journalize the transactions and the closing entry for net income. Enter the beginning balances in the accounts, and post the journal entries to the stockhold..

Compute the price of a bond : The Florida Investment Fund buys 98 bonds of the Gator Corporation through a broker. The bonds pay 12 percent annual interest. The yield to maturity (market rate of interest) is 14 percent. The bonds have a 20-year maturity. Compute the total value o..

User Account

All Pages