Calculate the value of a bond that matures in 14 years and has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 8 percent.

 

A bond that matures in 18 years has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 17 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?

 

Enterprise, Inc. bonds have an annual coupon rate of 12 percent. The interest is paid semiannually and the bonds mature in 8

years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 14 percent, what is the value of the bond? What is its value if the interest is paid annually?

 

A bond's market price is $800. It has a $1,000 par value, will mature in 12 years, and has a coupon interest rate of 9 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 24 years? What if it matures in 6 years?

 

Fitzgerald's 35-year bonds pay 7 percent interest annually on a $1,000 par value. If the bonds sell at $825, what is the bond's yield to maturity? What would be the yield to maturity if the bonds paid interest semiannually? Explain the difference.

 

Doisneau 22-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 17 percent, are these premium or discount bonds? Explain your answer. What is the price of the bonds?

 

Hoyden Co.'s bonds mature in 12 years and pay 8 percent interest annually. If you purchase the bonds for $1,250, what is their yield to maturity?

 

Abner Corporation's bonds mature in 16 years and pay 12 percent interest annually. If you purchase the bonds for $900, what is your yield to maturity?

 

A bond of Telink Corporation pays $120 in annual interest, with a $1,000 par value. The bonds mature in 25 years. The market's required yield to maturity on a comparable-risk bond is 9 percent. Calculate the value of the bond. How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 14 percent or (ii) decreases to 6 percent? Interpret your findings.

 

What would you expect the nominal rate of interest to be if the real rate is 4.4 percent and the expected inflation rate is 6.7percent?