Question
Hello, I need help. Please answer the problems and for number answers please provide excel solution 1. If the coupon interest rate remains constant from
Hello, I need help. Please answer the problems and for number answers please provide excel solution
1. If the coupon interest rate remains constant from the time of issue until the bonds matures then the bonds is call (floating rate or fixed rate) (pick one) bonds
2. Which of the bond contract allows the issuers to redeem bonds under specified terms prior to maturity
a. call provision
b. put provision
c. convertible provision
d. deferred call provision
3What term is used to describe the call provision in which the issuer is prevented from calling
a portion or the entire issue for several years during the early years of the bond issue.
a. deferred call provision
b. declining call provision
c. sinking fund provision
4.Based on the descriptions given in the following table, identify the type of bond that best matches each description.
Bonds that offer a lower coupon rate than the market interest rate for a similar bond at the time of issue ( original issue discount bond, payment in kind bond, fallen agnels, par value bonds) (pick one)
Bonds that mus increase the bonds coupon rate if the company rating is downgraded ( payment in kind bonds, set up provision in bonds, zero coupon bonds, original issue discount bonds) ( pick one)
Suppose you invested in company A's bonds and the company used a large amount of the debt to acquire another firm. the deal led to sigificant loss to bond holder and negative impact on credit..
The companies bond rating is likely to ( increase or decrease ) the yield to maturity will (decrease pr increase) (pick one) and the value of outstanding bonds will ( increase or decrease)
The covenant allows the issuer to pay off the remaining debt early. The issuer will its outstanding bonds at the call price equal to the market price of a similar noncallable bond. Such a covenant is called price equal to the market price of a similar non callable bond ( super posion bond or make whole call provision)
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