What is the possible range of prices for this bond

Assignment Help Finance Basics

Reference no: EM13297690

Junk Corp.'s high-yield bond has the following features: Principal $1,000 Coupon 10% Maturity 5 years Special features: Company may extend the life of the bond to 10 years a) If interest rates are currently 12 percent on comparable high-yield securities and are not expected to change, what is the price of this bond? b) If interest rates are currently 9 percent on comparable high-yield securities and are not expected to change, what is the price of this bond? c) If interest rates are currently 9 percent on comparable high-yield securities but the investor has no forecast as to future rates, what is the possible range of prices for this bond?

Reference no: EM13297690

Questions Cloud

Calculate the uniform flow depth in the channel at flow rate : Water flows i a 8-m-wide rectangular channel that has longitudinal slope of .0001. The channel has an equivalent sand roughness of 2mm. Calculate the uniform flow depth in the channel when the flow rate is 15m^3/s. Use the Darcey-Weisbach equation..

How much did the investor lose on the purchase of the bond : An investor buys a $1,000, 20 year 7 percent (interest paid semiannually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?

Determine how many bolt and hole have to be recycled : You are going to assemble 1,000 bolt + hole combinations. The bolts have a mean diameter of 1.000 cm, normally distributed with standard deviation of 0.010 cm. The holes have a mean diameter of 1.030 cm, normally distributed with standard deviatio..

What was the annual return you earned on this investment : How much will you have when the bond is retired after twelve years? What was the annual return you earned on this investment?

What is the possible range of prices for this bond : If interest rates are currently 9 percent on comparable high-yield securities but the investor has no forecast as to future rates, what is the possible range of prices for this bond?

Compute evaporation rates in the winter and in the summer : At a certain location during the winter, the average air temperature is 10 degrees celcius and the net radiation is 40W/m^2 and during the summer the net radiation is 200W/m^2 and the temperature is 25 degrees celcius.

What is the number of payments per year : What is the number of payments per year where the costs of the two banks will be equal? Assume Dupree's cost of funds is 9%.

Determine the tension t and the reaction at b and d : Two transmission belts pass over sheaves welded to an axle supported by a thrust bearing at B and a journal bearing at D. The sheaves A has a radius of 50mm, and the sheave at C has a radius of 40mm.

Create a logical expression : Create a logical expression that corresponds to the following statement - Complete the truth table for the expression created.

User Account

All Pages