IMEX Global Solutions issued a bond on December 31, 2015 to the public which pays $80 once per year in interest and a $1,000 principal repayment after year 10, and is priced in the open market to reflect a required return of 11.5% to bondholders, or $798. The companys management has the option of redeeming this bond early for $1,050 plus any accrued interest.

As it relates to the IMEX bonds, identify the following:

Face value

Market value

Coupon rate

Yield to maturity

Current yield

Call premium

Maturity

Identify the following general statements concerning bonds as True or False:

Bonds provide tax benefits to issuers of bonds.

The risk of company insolvency increases when a firm issues bonds.

Municipal bonds pay interest that is federally and state tax-free.

All else constant, a bond will sell at a discount when its coupon rate is less than its yield to maturity.

Decreasing the time to maturity increases the price of a discount bond, all else unchanged.

SHOW YOUR CALCULATIONS VIA MS-EXCEL WITH FORMULAS

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