What is the bond price, Mark Corporation's bonds have a

What is the bond price

Assignment Help Corporate Finance

Reference no: EM132190161

Homework -

Q1. AAA Corporation recently issues noncallable bonds that mature in 15 years. They have a par value of $1,000 and annual coupon rate of 5.7%. If the current market interest rate is 7.0%, at what price should the bonds sell? Hint: find PV.

Q2. Sakha Inc's bonds currently sell for $1,180 and have a par value of $1,000. They pay $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?

Q3. Macro's bonds sell for $1,050. They have a 6-year maturity, an annual coupon of $75, and a par value of $1,000. What is their market interest rate?

Q4. Mark Corporation's bonds have a 15-year maturity, a 7.25% coupon interest, and a par value of $1,000. The going interest rate is 6.20%.

a. What is the bond's price?

b. If the bond is paying semiannual coupon interest, what is the bond price?

c. If the bond is callable at the end of year 5 at $1,050 with semiannual coupon interest, what is the bond's yield to call (YTC)? Hint: the PV of the bond is from question (b).

Q5. An investor purchased bond A and bond C. Each bond matures in 4 years, has face value of $1,000, and has a yield to maturity of 7.2%. Bond A pays an 11.5% annual coupon, while Bond C is a zero-coupon bond.

a. Find the current market price for bond A and C.

b. Assuming that the yield to maturity of each bond remains at 7.2% over the next 4 years. Calculate the price of the bonds at each of the following maturity:

Years to Maturity	Price of Bond A	Price of Bond C
4
3
2
1
0

Q6. Find the expected current yield and the capital gains yield of the following table. Assume that the market rate is 10% and coupon payment is $70. Refer to the Excel Spreadsheet and PPTs.

N	Price	Expected current yield	Capital Gains yield	Expected total return
5	$886.28
4	$904.90
3	$925.39
2	$947.93
1	$972.73
0	$1,000.00

Reference no: EM132190161

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