1 / 9

Questions-Bond Valuation and Interest Rates

Questions-Bond Valuation and Interest Rates. Q1). Lycan, Inc., has 7.6% coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 9.6%, what is the current bond price? What if payments are semi-annual?. Q2).

shippy
Download Presentation

Questions-Bond Valuation and Interest Rates

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Questions-Bond Valuation and Interest Rates

  2. Q1) • Lycan, Inc., has 7.6% coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 9.6%, what is the current bond price? • What if payments are semi-annual?

  3. Q2) • Merton Enterprises has bonds on the market making annual payments, with 14 years to maturity, and selling for $953. At this price, the bonds yield 9.4%. What must the coupon rate be on Merton’s bonds? • What if payments are semi-annual?

  4. Q3) • 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%

  5. Q4) • 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?

  6. Q5) • 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?

  7. Q6) • 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? 

  8. Q7) • 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?

  9. Q8) • 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?

More Related