Answer the following questions correctly.,,,
Bond A pays semi-annual coupons, pays its next coupon in 6 months, and matures in 4 years.
Bond B pays annual coupons, pays its next coupon in 1 year, and matures in 7 years.
Both bonds have a face value of $1000 and both bonds have the same yield-to-maturity.
Bond A has a coupon rate of 13.60 percent and is priced at $1,024.45. Bond B has a coupon rate of 7.90 percent.
What is the price of bond B?
172 CHAPTER 7 6. [Bond Valuation with Annual Payments) A corporate bond pays interest annually, has a coupon rate of 6 nice value of $1,000, and has a market interest rate of 6.1%. What is the intrinsic value of Jayson's bond yes a. 10 years to maturity? b. 20 years to maturity? C. 30 years to maturity? 7. [Bond Valuation with Annual Payments) A corporate bond pays interest annually, has 10 years to maturity,a face value of $1,000, and has a market interest rate of 6.1%. What is the intrinsic value of Jayson's bond with a. 5% coupon rate? b. 6% coupon rate? c. 7% coupon rate? d. 8% coupon rate? B. (YTM w/ annual payments) A corporate bond is priced at $959.25. It has a coupon rate of 3.5%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? 9 (YTM w/ annual payments) A corporate bond is priced at $1.059.25. It has a coupon rate of 4.5%%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? 10. (YTM w/ semi-annual payments) A corporate bond is priced at $969.25. It has a coupon rate of 4.5% matures in 30 years, and has a face value of $1,000.What is the bond's yield to maturity? 11. (YTM w/ semi-annual payments] A corporate bond is priced at $1.159.25. It has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000.What is the bond's yield to maturity? 12. (Current yield and YTM) A corporate semi-annual interest paying bond is priced at $1.159.25. It has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000. What is the bond's current yield and yield to maturity? 13. (current yield and YTM) A corporate semi-annual interest paying bond is priced at $1000.00 it has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000. What is the bond's current yield and yield to maturity? 14. (Callable bond) Frankfort corporation has an outstanding 15% bond that pays interest semi-annually. The 30-year bond has 20 years until maturity and has a face value of $1,000. Frankfort, realizing that the bonds were issued at a relatively high interest rate era, has a call feature in the indenture of the bond. This feature requires Frankfort to pay one year of interest in the event that Frankfort calls the bond. The bonds are callable after 10 years upon issuance. a. If the bond is not expected to be called, what is the price of the bond? b. If the bond is expected to be called, what is the price of the bond? 5. (Callable bond) Bostitch Inc. has an outstanding 25%% bond that pays interest semi-annually. The 20-year bond has 10 years until maturity and has a face value of $1,000. Bostitch, realizing that the bonds were issued at a relatively high interest rate era, has a call feature in the indenture of the bond. This feature requires Frankfort to pay one year of interest in the event that Bostitch calls the bond. The bonds are callable after 10 years upon issuance. a. If the bond is not expected to be called, what is the price of the bond? b. If the bond is expected to be called, what is the price of the bondExercise for the Final [not graded] Ten sales regions of equal sales potential for a company were randomly selected. The advertising expenditures {in units of$10,000} in these 10 sales regions were purposely set dun'ng July of last year at, respectively, 5, E, T, B, 0', 1'0, 11, 12, 13 and 14. The sales volumes {in units of$10,000] were then recorded for the 10 sales regions and found to be, respectively, 113, 11E, 105, 105, 120, 114, 110, 110, 104, and 103. Assuming that the simple linear regression model is appropn'ate, it can be shown that ho = 119.3001 111 = .9333. a] Is the slope signicant? Conduct a formal critical value test, and a formal P value test. b} Is the F test signicant? C} Can you predict 1'" when it is 1? If yes, what is your prediction? (1] Can you predict 1"; when it is 11? If yes, what is your prediction? The following table is the output of multiple linear regression analysis. ANDUA 55 [If MS F pvalue Regression 19,?525919 1 1 HIE-12.5919 532.31 .0000 Residual 3311.1 354 9 33.1252 Total museum1o {a} Use the table to report the F statistic. What is its degrees of freedom? What is the number of observations? {h} Find the pvalue related to F on the computer output and report its value. Using the pvalue, test the significance of the regression model at the .10, .05, .01, and .001 levels of signicance. What do you conclude? THE FUEL CONSUMPTION CASE Using the appropriate model, sample size n, and output below: Model: y = Bo + Box + Bex2 + : Sample size: n = 8 S = .5561 R-Sq = 93.1% R-Sq(adj) = 90.3% Analysis of Variance Source DF SS MS F P Regression 20.8141 10.4070 33.66 .0013 Residual Error 1.5459 3092 Total 7 22.3600 (1) Report SSE, s2, and s as shown on the output. Calculate s from SSE and other numbers. (Round your answers to 4 decimal places.) (2) Report the total variation, unexplained variation, and explained variation as shown on the output. (Round your answers to 3 decimal places.) Total variation 22.380 Unexplained variation 1.546 Explained variation 20.814 (3) Report R2 and adjusted R2 as shown on the output. (Round your answers to 3 decimal places.) (4) Calculate the E statistic. (7) Find the p-value related to E on the output. Using the p-value, test the significance of the linear regression model by setting a = .10, .05, .01, and .001
