PMX has issued a bond with the following characteristics: Par: $1,000, Time to maturity: 15 years,...

  

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PMX has issued a bond with the following characteristics: Par: $1,000, Time to maturity: 15 years, Coupon rate: 7 percent Semiannual payments Calculate the price of this bond if the YTM is: a percent b.2 percent S..5 percent Renaissance Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.6 percent, and a current price of $1,060. The bonds make semiannual payments. What must the coupon rate be on these bonds? Assume that par value is $1,000. You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 7 percent, and 25 years to maturity. If you hold the bond for the entire year and sell it, how much in interest income will you have to declare on your tax return? Lauriel, Inc., and Harmony Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Lauriel, Inc., bond has 2 years to maturity, whereas the Harmony Corp. bond has 15 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then? You own $100,000 worth of SMS stock. One year from now, you will receive a dividend of $2.25 per share. You will receive a $2.40 dividend two years from now. You will sell the stock for $65 per share three years from now. Dividends are taxed at the rate of 28 percent. Assume there is no capital gains tax. The after-tax required rate of return is 15 percent. How many shares of stock do you own? PMX has issued a bond with the following characteristics: Par: $1,000, Time to maturity: 15 years, Coupon rate: 7 percent Semiannual payments Calculate the price of this bond if the YTM is: a percent b.2 percent S..5 percent Renaissance Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.6 percent, and a current price of $1,060. The bonds make semiannual payments. What must the coupon rate be on these bonds? Assume that par value is $1,000. You buy a zero coupon bond at the beginning of the year that has a face value of $1,000, a YTM of 7 percent, and 25 years to maturity. If you hold the bond for the entire year and sell it, how much in interest income will you have to declare on your tax return? Lauriel, Inc., and Harmony Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Lauriel, Inc., bond has 2 years to maturity, whereas the Harmony Corp. bond has 15 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then? You own $100,000 worth of SMS stock. One year from now, you will receive a dividend of $2.25 per share. You will receive a $2.40 dividend two years from now. You will sell the stock for $65 per share three years from now. Dividends are taxed at the rate of 28 percent. Assume there is no capital gains tax. The after-tax required rate of return is 15 percent. How many shares of stock do you own?

Answer rating: 100% (QA)

a Price of PMX bond if YTM is 375 Using the bond pricing formula P PV of cash flows C103752 C103754 ... View the full answer