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I NEED PART 5 answer 1.)What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? 2.) The Garraty
I NEED PART 5 answer
1.)What are call provisions and sinking fund provisions? Do these provisions make bonds more or less risky? 2.) The Garraty Company has two bond issues outstanding. Both bonds pay $90 annual interest (coupon rate of 9%) with a $1,000 face value. Bond L has a maturity of 15 years, and Bond S has a maturity of 1 year. What will be the value (present value) of each of these bonds when the going rate of interest (YTM) is 7%, 9%, and 11 %? ( Note that you will have to figure each of them). Assume that there is only one more interest payment to be made on Bond S. Why does the longer-term (15 years) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)? 3.) Go to, The Wall Street Journal, online; (https://www.wsj.com/market-data/bonds) and go to the bond section Write a paragraph about some of the largest gainers and decliners including, their coupon rate, maturity date, current price, and the change in price. 4) The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid semi-annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $918 or $1,104 Would you pay $918 for one of these bonds if you thought that the appropriate rate of return was 12%? Explain your answer. 5.) Sally Walker is the new CFO of Mills, Inc. The CFO before her lost some documents and she is trying to figure out how much interest they owe on their April 1st payment on their 5,000 outstanding bonds (these are normal $1,000 corporate bonds). The bonds are currently selling for $1,235, have 13 years to maturity, and a yield to maturity of 8.75%. Sally knows they make annual payments but she needs help determining how much the company owes (for the total payment not for just one bond but all 5,000 bonds)Step by Step Solution
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