Bond A has the following terms:
Bond A has the following terms: I Coupon rate of interest {paid annually): 12 percent I Principal: $1,000 I Terrn to maturity: Ten years Elond E has the following terms: I Coupon rate of interest {paid annually): 6 percent I Principal: $1,000 I Terrn to maturity: Ten years a. What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: :15 b. What will be the price of each bond if, after three years have elapsed, interest rate is 12 percent? Use Appendix E and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond E: at c. What will be the price of each bond if, after ten years have elapsed, interest rate is 11 percent? Use Appendix E and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond E: $ A bond has the following features: - Coupon rate of interest {paid annually): 9 percent I Principal: $1,000 I Term to maturity: 12 years a. What will the holder receive when the bond matures? b. If the current rate of interest on comparable debt is 7 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. :5 Would you expect the firm to call this bond? Why? , since the bond is selling for a . c. If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for twelve years if the funds earn 3' percent annually and there is $80 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. $ You are given the following information concerning a noncallable, sinking fund debenture: Principal: $1,000 I Coupon rate of interest: 5 percent I Term to maturity: 1? years I Sinking fund: 4 percent of outstanding bonds retired annually} the balance at maturity a. If you buy the bond today at its face amount and interest rates rise to 12 percent after five years have passed, what is your capital gain or loss? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Use a minus sign to enter the loss amount, if any, as a negative value. Round your answer to the nearest dollar. $ b. If you hold the bond 17 years, what do you receive at maturity? -Select- Y c. What is the band's current yield as of right now? Round your answer to the nearest whole number. We d. Given your price in a, what is the yield at maturity? Round your answer to the nearest whole number. We e. What proportion of the total debt issue is retired by the sinking fund? Round your answer to the nearest whole number. We f. If the final payment to retire this bond is $900,000, how much must the firm invest annually to accumulate this sum if the firm is able to earn 5 percent on the invested funds? Use Appendix C to answer the question. Round your answer to the nearest dollar. $
