Judith, Inc. bonds mature in 8 years and pay a semi-annual coupon of $55. The bonds par
Question:
Judith, Inc. bonds mature in 8 years and pay a semi-annual coupon of $55. The bond’s par value is $1,000.
a. What is their current price if the market interest rate for bonds of similar quality is 9.2%?
b. A change in Fed policy increases market interest rates 0.50 percentage points from their level in part a. What is the percentage change in the value of Judith, Inc. bonds from their value in part a?
c. Better profits for Judith, Inc. reduces the market interest rate for its bonds to 9.0%. What is the percentage change in the value of Judith, Inc. bonds from the answer in part b?
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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Related Book For 
Introduction to Finance Markets Investments and Financial Management
ISBN: 978-1118492673
15th edition
Authors: Melicher Ronald, Norton Edgar
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