Bond valuation

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A tax-exempt bond was recently issued at an annual 12 percent coupon rate and matures 20 years from today. The par value of the bond is $1,000.
a. If a required market rates are 12 percent, what is the market price of the bond?
b. If required market rates fall to 6 percent, what is the market price of the bond?
c. If required market rates rise to 18 percent, what is the market price of the bond?
d. At what required market rate (6 percent, 12 percent or percent) does the above bond sell at a discount? At a premium?
Assuming that bond in problem above matures in five years, what would be the market prices under the various required market interest rate changes?

Charles City Hospital plans on issuing a tax-exempt bond at the bond at an annual coupon rate of 8 percent with a maturity of thirty years. The par value of the bond is $1,000.
a. If required market rates are 8 percent, what is the value of the bond?
b. If required market rates fall to 4 percent what is the value of the bond?
c. If required market rates fall to 12 percent, what is the value of the bond?
d. At what required market rate (4 percent, 8 percent, or 12 percent) does the above bond sell at a discount? At a premium?

A $1,000 par value bond with an annual 6 percent coupon rate with mature in twelve year. Coupon payments are made semi-annually. What is its market price if the required market rate is 4 percent?

Reference no: EM1343849

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