valuation, Finance Basics

Assignment Help:
(Interest-rate risk) Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose PhilEl''s bonds have identical coupon rates of 9.125% but that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday.
i. If the yield to maturity for all three bonds is 8%, what is the fair price of each bond?
ii. Suppose that the yield to maturity for all of these bonds changed instantaneously to 7%.What is the fair price of each bond now?
iii. Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond?

Related Discussions:- valuation

Comparison a competing firm-analysts earnings estimates, Comparison to a Co...

Comparison to a Competing Firm In Mergent Horizon, return to the competitor page, but now enter the list of competitors "As Defined by the Company."  From this list select a f

Real estate, A home buyer lists her home at a 7% commission rate and wants ...

A home buyer lists her home at a 7% commission rate and wants to net 45,000 after paying the mortgage balance of 68,000 and the broker''s commission. To the nearest dollar, what sh

Explain about commercial banks in depository institutions, Explain about co...

Explain about commercial banks in depository institutions. Commercial banks: Commercial banks accept deposits or liabilities to create loans or assets and to buy governme

Australi a, i ordered case study 1 susam and malcom. when i open the docume...

i ordered case study 1 susam and malcom. when i open the document is completely different, not the same case study an is only relivent in the usa not australia... do you have the c

Example of debt finance, Example of Debt Finance An example: Intere...

Example of Debt Finance An example: Interest = 10% tax rate = 30% The effective cost of debt (interest) = Interest rate (1 - T) = 10%(1-0.30) = 7% Consider comp

Important points - creditors finances, Important Points - Creditors Finance...

Important Points - Creditors Finances When by using creditor's finances a company must consider: 1. That cost of finance is less than the Return that implies the rate shoul

Calculate the retrospective gross premium reserve, Question: A deferred...

Question: A deferred annuity policy is sold to a life aged 45 with the following benefits: • Basic payments start at $30,000 from age 65, increasing by $2,000 each year; •

Concentration banking, Concentration Banking Firms along with regional...

Concentration Banking Firms along with regional sales outlets can designate specific of these as regional collection centre. Customers during these areas are necessitated to r

Calculate average price-earnings ratio, Regan Inc., was founded nine years ...

Regan Inc., was founded nine years ago by brother and sister Carrington and Genevieve Regan. The company manufactures and installs commercial heating, ventilation, and cooling (HVA

Features of debt securities, In order to value a debt security correctly, w...

In order to value a debt security correctly, we must understand the terms and conditions of debt securities precisely. These terms define the contractual rights of the debt securit

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd