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(Related to Checkpoint 9.3) (Bond valuation) Calculate the value of a bond that matures in 12 years and has a $1,000 par value. The annual

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(Related to Checkpoint 9.3) (Bond valuation) Calculate the value of a bond that matures in 12 years and has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. The value of the bond is $]. (Round to the nearest cent.) (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value. It matures in 20 years. The market's required yield to maturity on a comparable-risk bond is 6 percent. a. Calculate the value of the bond. b. How does the value change if the market's required yield to maturity on a comparable-risk bond increases to 12 percent or (ii) decreases to 5 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 20 years. Recompute your answers in parts a and b. c. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds. a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 6 percent? (Round to the nearest cent.) (Bond valuation relationships) Stanley, Inc. issues 10-year $1,000 bonds that pay $80 annually. The market price for the bonds is $936. The market's required yield to maturity on a comparable-risk bond is 9 percent. a. What is the value of the bond to you? b. What happens to the value if the market's required yield to maturity on a comparable-risk bond (1) increases to 12 percent or (i) decreases to 7 percent? c. Under which of the circumstances in part b should you purchase the band? a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 9 percent? (Round to the nearest cent)

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