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May you help me? Question 3 Four years ago, SONO Ltd. raised $30 million by issuing 15-year $1,000 par value bonds that carry 6.8% coupon
May you help me?
Question 3 Four years ago, SONO Ltd. raised $30 million by issuing 15-year $1,000 par value bonds that carry 6.8% coupon rate, payable semiannually. SONO Ltd. is currently announcing to raise another $20 million by issuing 15-year zero coupon bonds that discount semi-annually. The current YTM on these bonds is 9%. (a) Calculate the number of the 15-year coupon bonds that SONO Ltd. issued to raise the $30 million four years ago. What will be the company's repayment be at the maturity date of the 15-year coupon bonds? (6 marks) (b) Calculate the current bond prices of the 15-year coupon bonds and 15-year zero coupon bonds. (6 marks) (c) Calculate the number of the 15-year zero coupon bonds that SONO Ltd. currently issues to raise the $20 million. What will be the company's repayment be at the maturity date of the 15-year zero coupon bonds? (6 marks) (d) Are 15-year 6.8% coupon bonds or 15-year zero coupon bonds more sensitive to changes in market interest rates? (2 marks)Step by Step Solution
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