Problem 8,10,12, and 14
(Bond valuation with Annual Payments) A corporate bond pays interest annually, has a coupon rate of 6%, a face value of $1,000, and has a market interest rate of 6.1%. What is the intrinsic value of Jayson's bond with: a. 10 years to maturity? b. 20 years to maturity? c. 30 years to maturity? (Bond valuation with Annual Payments) A corporate bond pays interest annually, has 10 years to maturity, a face value of $1,000, and has a market interest rate of 6.1%. What is the intrinsic value of Jayson's bond with: a. 5% coupon rate? b. 6% coupon rate? c. 7% coupon rate? d. 8% coupon rate? (YTM w/annual payments) A corporate bond is priced at $959.25. It has a coupon rate of 3.5%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? (YTM w/annual payments) A corporate bond is priced at $1.059.25. It has a coupon rate of 4.5%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? (YTM w/semi-annual payments) A corporate bond is priced at $969.25. It has a coupon rate of 4.5%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? (YTM w/semi-annual payments) A corporate bond is priced at $1.159.25. It has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000. What is the bond's yield to maturity? (Current yield and YTM) A corporate semi-annual interest paying bond is priced at $1.159.25. It has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000. What is the bond's current yield and yield to maturity? (current yield and YTM) A corporate semi-annual interest paying bond is priced at $1000.00. It has a coupon rate of 5.5%, matures in 30 years, and has a face value of $1,000. What is the bond's current yield and yield to maturity? (Callable bond) Frankfort corporation has an outstanding 15% bond that pays interest semiannually. The 30-year bond has 20 years until maturity and has a face value of $1,000. Frankfort, realizing that the bonds were issued at a relatively high interest rate era, has a call feature in the indenture of the bond. This feature requires Frankfort to pay one year of interest in the event that Frankfort calls the bond. The bonds are callable after 10 years upon issuance. a. If the bond is not expected to be called, what is the price of the bond? b. If the bond is expected to be called, what is the price of the bond? (Callable bond) Bostitch Inc. has an outstanding 25% bond that pays interest semi-annually. The 20-year bond has 10 years until maturity and has a face value of $1,000. Bostitch, realizing that the bonds were issued at a relatively high interest rate era, has a call feature in the indenture of the bond. This feature requires Frankfort to pay one year of interest in the event that Bostitch calls the bond. The bonds are callable after 10 years upon issuance. a. If the bond is not expected to be called, what is the price of the bond? b. If the bond is expected to be called, what is the price of the bond
