Given a 15-year bond that sold for $1,000 with a 9 percent coupon rate, what would be the price of the bond if interest rates in the marketplace on similar bonds are now 12 percent? Interest is paid semiannually. Assume a 15-year time period.
Answer to relevant QuestionsGiven the facts in problem 2, what would be the price if interest rates go down to 8 percent? (Once again, do a semiannual analysis.) What is the current yield in problem 8? Why is it slightly higher than the yield to maturity? A convertible bond has a face value of $1,000, and the conversion price is $50 per share. The stock is selling at $42 per share. The bond pays $60 per year interest and is selling in the market for $930. It matures in 15 ...Based on your answer to problem 5, what is the downside risk as a percentage? Why would a high-beta stock often have a greater speculative premium than a low-beta stock?
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