1 Forty-year B-rated bonds of Parker Optical Company were initially issued at a 12 percent yield. After 39 years the bonds have been upgraded to Aa2. Such bonds are currently yielding 10 percent to maturity. Use Table 16-2. Determine the price of the bonds with 1 years remaining to maturity.

Determine the price of the bonds with 1 years remaining to maturity.

What is price of bonds?

2. Cox Media Corporation pays a 7 percent coupon rate on debentures that are due in 10 years. The current yield to maturity on bonds of similar risk is 6 percent. The bonds are currently callable at $1,070. The theoretical value of the bonds will be equal to the present value of the expected cash flow from the bonds. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Find the market value of the bonds using semiannual analysis.

Note: Ignore the call price in your answer. Do not round intermediate calculations and round your answer to 2 decimal places.

1. Do you think the bonds will sell for the price you arrived at in part a?

1. multiple choice

Yes

No