Bond Bond Value Current Yield Bond A Bond B Bond C Discount Rate 5.00% 15.00% 15.60% Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete the following statements: the required yield, and the market A bond is referred to as a par bond when the coupon rate value the par value. A bond is referred to as a discount bond when the coupon market value the par value. A bond is referred to as a premium bond when the coupon rate market value the par value. II AV the required yield, and the the required yield, and the If the market price of the bond is equal to the intrinsic value (the computed value), which bond listed is selling at par? Bond C Bond A O Bond B Yield to maturity (YTM) is the rate of return expected from a bond held until its maturity date. However, the YTM equals the expected rate of return under certain assumptions. Which of the following is one of these assumptions? The bond is callable. The probability of default is zero. Consider the case of Demed Inc. Value Demed Inc. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $950.35. However, Demed Inc. may call the bonds in eight years at a call price of $1,060. What are the YTM and yield to call (YTC) on Demed Inc.'s bonds? YTM YTC If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Demed Inc.'s bonds? O 13 years 8 years 10 years 18 years If Demed Inc. issued new bonds today, what coupon rate must the bonds have to be issued at par? 8.88%