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I would like to get the following Bonds, Bond Valuation, and Interest Rates questions answered. Please see attached for details. QUESTION 1 1. Ibesa Corporation's

I would like to get the following Bonds, Bond Valuation, and Interest Rates questions answered. Please see attached for details.image text in transcribed

QUESTION 1 1. Ibesa Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call? 5.01% 5.27% 5.54% 5.81% 6.10% QUESTION 2 1. Bonds A and B are 15year, $1,000 face value bonds. Bond A has a 7% annual coupon, while Bond B has a 9% annual coupon. Both bonds have a yield to maturity of 8%, which is expected to remain constant for the next 15 years. Which of the following statements is CORRECT? One year from now, Bond A's price will be higher than it is today. Bond A's current yield is greater than 8%. Bond A has a higher price than Bond B today, but one year from now the bonds will have the same price. Both bonds have the same price today, and the price of each bond is expected to remain constant until the bonds mature. Bond B has a higher price than Bond A today, but one year from now the bonds will have the same price. QUESTION 3 1. Rague Co.'s 10year bonds have an annual coupon rate of 10%. Each bond has face value of $1,000 and makes semiannual interest payments. If you require an 12.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? $885.3 0 $887.00 $919.19 $1,000 $900.8 9 QUESTION 4 1. Kessen Inc.'s bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond's price? $923.22 $946.30 $969.96 $994.21 $1,019.06 1. Which of the following bonds would have the greatest percentage increase in value if all interest rates fall by 1%? 20year, 10% coupon bond. 20year, 5% coupon bond. 1year, 10% coupon bond. 20year, zero coupon bond. 10year, zero coupon bond. QUESTION 2 1. Haslett Enterprises' bonds have a 10year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (r d) is 4.75%, based on semiannual compounding. What is the bond's price? 1,117.25 1,156.54 1,118.31 1,137.85 1,000.00 QUESTION 3 1. Vielman Corporation's bonds have 20 years to maturity, an 10% coupon paid semiannually, and a $1,000 par value. The bond has a 8% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call? 6.31% 6.64% 7.32% 7.69% 6.97% QUESTION 4 1. Curtis Corporation's noncallable bonds currently sell for $1,165. They have a 15 year maturity, an annual coupon of $95, and a par value of $1,000. What is their yield to maturity? 6.20% 6.53% 6.87% 7.24% 7.62% QUESTION 5 1. A 10year bond pays an annual coupon, its YTM is 8%, and it currently trades at a premium. Which of the following statements is CORRECT? If the yield to maturity remains at 8%, then the bond's price will decline over the next year. The bond's coupon rate is less than 8%. If the yield to maturity increases, then the bond's price will increase. If the yield to maturity remains at 8%, then the bond's price will remain constant over the next year. The bond's current yield is less than 8%. QUESTION 6 1. Which of the following statements is CORRECT? The total yield on a bond is derived from dividends plus changes in the price of the bond. Bonds are riskier than common stocks and therefore have higher required returns. Bonds issued by larger companies always have lower yields to maturity (less risk) than bonds issued by smaller companies. The market value of a bond will always approach its par value as its maturity date approaches, provided the bond's required return remains constant. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices

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