valuation, Finance Basics

(Interest-rate risk) Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose PhilEl''s bonds have identical coupon rates of 9.125% but that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday.
i. If the yield to maturity for all three bonds is 8%, what is the fair price of each bond?
ii. Suppose that the yield to maturity for all of these bonds changed instantaneously to 7%.What is the fair price of each bond now?
iii. Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond?
Posted Date: 9/21/2012 3:59:25 AM | Location : United States







Related Discussions:- valuation, Assignment Help, Ask Question on valuation, Get Answer, Expert's Help, valuation Discussions

Write discussion on valuation
Your posts are moderated
Related Questions
Functions of the Stock Exchange The essential function of a stock exchange is the raising of funds for investment in long-term assets. Whereas this basic function is very sign

Discuss capital budgeting techniques including : the Payback Rule, IRR, NPV, and the Profitability Index. Be sure to discuss the advantages and disadvantages of each one.  Di

how ca i calculate the common stock dividends in the income statement if it is not mentioned

Trial and Error Method a) Select any rate of interest on random and employ it to compute NPV of cash inflows. b) If rate selected produces NPV lower than the cost, want a l


The Genesis operations management team, nearing completion of its agreement with Sensible Essentials, was asked by senior management to present a capital plan for the operating exp

Mermaid Coffee Corporation (MCC) has 1,000,000 shares of stock currently trading at $42 per share. The company has issued 20,000 bonds, each with market value $928.59 and yield to

continous time finaince expert

Task The following information has been extracted from the accounts of R Ltd., a manufacturer and distributor of home cordless phone in Hong Kong.

Business Finance and Financial Management Business finance is the process through which a financial manager or accountant gives finance for business use as and whenever it i