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Questions-Bond Valuation and Interest Rates

Analyze bond prices based on different yield-to-maturity rates and coupon rates for various scenarios. Calculate bond values and yields.

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Questions-Bond Valuation and Interest Rates

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  1. Questions-Bond Valuation and Interest Rates

  2. Q1) • Microhard has issued a bond with the following characteristics: • Par=$1,000 • Time to Maturity: 13 years • Coupon Rate:8% • Semiannual payments • Calculate the price of this bond if the YTM is: • 8% • 10% • 6%

  3. Q2) • Watters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 7 percent. The bonds make semiannual payments. If these bonds currently sell for 90 percent of par value, what is the YTM?

  4. Q3) • Rhiannon Corporation has bonds on the market with 14.5 years to maturity, a YTM of 7.5 percent, and a current price of $1,061. The bonds make semiannual payments. • What must be the coupon rate on these bonds?

  5. Q4) • The Faulk Corp. has a 4 percent coupon bond outstanding. The Gonas Company has a 10 percent bond outstanding. Both bonds have 13 years to maturity, make semiannual payments, and have a YTM of 7 percent. • If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? 

  6. Q5) • The Faulk Corp. has a 5 percent coupon bond outstanding. The Gonas Company has a 11 percent bond outstanding. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 8 percent. • If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?

  7. Q6) • Hacker Software has 9.8 percent coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 107.7 percent of par. • What is the current yield on the bonds? • What is the YTM?  • What is the effective annual yield?

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