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
"Managerial leadership considers that the focus of school leaders ought to be on functions, tasks and behaviours and if these functions are carried out competently the work of othe

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

Assume IBM pays out all earnings as dividends. Today is t = 0 and IBM just paid a $2 dividend on $2 of earnings. The market expects dividends will grow each year by 5% until t = 4

Suppose that two players are playing the following game.  Player A can choose either Top or Bottom, and Player B can choose either Left or Right.  The payoffs are given in the foll

Important Points for Capital Market Authority Apart from the above roles, CMA can assume the given steps to encourage progress of stock exchanges in US or other countries.

Risk-Return Trade-Off Most financial decisions comprise alternative courses of action. The choices have different returns and risk.  As like example, must we buy a replacement

Download a set of financial statements "Creative Technology Ltd" From that set of Financial Statements. IN YOUR OWN WORDS, understand what the main revenue  streams of the business

#The following is the existing capital structure of Company XYZ Ltd. Ordinary shares at Shs.10 par 1,000,000 Retained 800,000 12% preference shares Shs.10 par 400,000 16% loan Shs.

Formation of Sole Proprietorship Business When an individual plans to start a business, his or her main objective is to earn profit but there are a number of factors to take in

A new pet shop wants to apportion their investment money $132,000 for advertising, building upgrades, and education in the ratio of 5:4:3. How much money does each category get app