eBook Problem Walk-Through Madsen Motors's bonds have 12 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 11.5%; and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent. B eBook Problem Walk-Through Nesmith Corporation's outstanding bonds have a $1,000 par value, a 11% semiannual coupon, 12 years to maturity, and a 7% YTM. What is the bond's price? Round your answer to the nearest cent. $ A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 6 years at $1,058.29, and currently sell at a price of $1,111.82. What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is their nominal yield to call? Do not round intermediate calculations. Round your answer to two decimal places % What return should investors expect to earn on these bonds? 1. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. II. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM III. Investors would expect the bonds to be called and to earn the YTC because the YTM is less than the YTC. IV. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. V. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. -Select- An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon, Bond L matures in 10 years, while Bond S matures in 1 year Assume that only one more interest payment is to be made on Bond S at its maturity and that 10 more payments are to be made on Bond L a. What will the value of the Bond L be if the going interest rate is 457 Round your answer to the nearest cent. $ What will the value of the Bond s be if the going interest rate is 4%7 Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond s be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent. $ b. Why does the longer-term bond's price vary more than the price of the shorter-term bond when interest rates change? 1. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. II. Long-term bonds have greater interest rate risk than do short-term bonds. III. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. IV. Long-term bonds have lower interest rate risk than do short-term bonds. V. Long-term bonds have lower reinvestment rate risk than do short-term bonds. -Select- Harriman Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8% a. What is the yield to maturity at a current market price of 1. $7717 Round your answer to two decimal places. % 2. $1,1217 Round your answer to two decimal places. b. Would you pay $771 for each bond if you thought that a "fair" market interest rate for such bonds was 14%-that is, ifra -14%? 1. You would not buy the bond as long as the yield to maturity at this price is greater than your required rate of return. II. You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond. III. You would buy the bond as long as the yield to maturity at this price is greater than your required rate of return. IV. You would buy the bond as long as the yield to maturity at this price is less than your required rate of return. V. You would buy the bond as long as the yield to maturity at this price equals your required rate of return. -Select A 6% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 6.6177%. What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the bond's YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answers to two decimal places. %
