Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
(Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. (please see multiple questions below)
Question
Answer
a. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond is 8 percent?
$
b. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond increases to 11 percent?
c. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond decreases to 7 percent?
d. The change in the value of a bond caused by changing interest rates is called interest-rate risk. Based on the answer: in parts b and c, a decrease in interest rates (the yield to maturity) will cause the value of a bond to (increase/decrease):
By contrast in interest rates will cause the value to (increase/decrease):
Also, based on the answers in part b, if the yield to maturity (current interest rate) equals the coupon interest rate, the bond will sell at (par/face value):
exceeds the bond's coupon rate, the bond will sell at a (discount/premium):
and is less than the bond's coupon rate, the bond will sell at a (discount/premium):
e. Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 8 percent? $ 960.07 Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 11 percent?
f. Assume the bond matures in 5 years instead of 25 years, what is the value of the bond if the yield to maturity on a comparable-risk bond is 7 percent?
g. From the findings in part e, we can conclude that a bondholder owning a long-term bond is exposed to (more/less) interest-rate risk than one owning a short-term bond
business plan review the quarterly report for gentiva health services and develop a business plan for the organization
assume that you contribute 400 per month to a retirement plan for 25 years. then you are able to increase the
a 1000 bond with a coupon rate of 5.4 paid semiannually has five years to maturity and a yield to maturity of 7.5. if
Computation of EMI of the loan and suppose you have decided to start saving money to buy a motorcycle for your loving spouse's
What is the promised yield to maturity based on the terms
What major factors should Home Depot be aware of as it evaluates possible investment projects in the future?
Mr. Smith is in the 30 percent tax bracket. He earns $50,000 per year. Determine the rate for Good Neighborcare bond that would give Mr. Smith the same after tax return as Megacorp bond?
Compare options, forwards, futures, and swaps for managing foreign exchange risk exposure. Form an argument for what you believe is the best method for a non-financial firm in managing this exchange rate risk.
Calculation of operating income, EBIT and dividend per share - What was the firm's operating income, or EBIT and What dividend per share should the company declare
Explain the difference between the amount you calculated for the Company's fair market value and the Total Equity (Book Value). What does it represent?
The cost of goods sold is 75% of the selling price. Per $100 of current sales, what is Tom's expected profit under the proposed credit standards.
The dividend is expected to grow at a constant rate forever. What is the growth rate for this stock?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd