A 1 000 face value bond issued by the Dysane Company
A $1,000 face value bond issued by the Dysane Company currently pays total annual interest of $79 per year and has a 13-year life.
a. What is the present value, or worth, of this bond if investors are currently willing to accept a 10 percent annual rate of return on bonds of similar quality if the bond is a Eurobond?
b. How would your answer in Part a change if the bond is a U.S. bond?
c. How would your answer in Part b change if, one year from now, investors only required a 6.5 percent annual rate of return on bond investments similar in quality to the Dysane bond?
d. Suppose the original bond can be purchased for $925. What is the bond’s yield to maturity?
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