1. A semiannual, $1,000 par value bond has a coupon rate of 8%. Investors required rate...

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1. A semiannual, $1,000 par value bond has a coupon rate of 8%. Investors required rate of return is 6.8% a. Calculate the bond's coupon payment (2 marks) b. Will this bond sell at a discount, or a premium? Briefly explain (2 marks) 2. Ybee Inc. issues semiannual bonds with par value of $1,000. The coupon rate is 7.4%, and investors required rate of return is 8%. a. If the bond matures in 20 years, how much will it sell for today? (3 marks) b. What is the current yield of the bond? (2 marks) 3. A four-year, $1,000 par value bond, pays interest of $70 at the end of the first year, $60 at the end of the second year, and $50 at the end of years three and four. How much will this bond sell for if the required rate of return is 8.2%? (5 marks) 4. What is the value of a 10 year, $1,000 par value bond with a coupon rate of 7% for the first eight years, and 8% for the last two years? The required rate of return is 9%. (6 marks) 1. A semiannual, $1,000 par value bond has a coupon rate of 8%. Investors required rate of return is 6.8% a. Calculate the bond's coupon payment (2 marks) b. Will this bond sell at a discount, or a premium? Briefly explain (2 marks) 2. Ybee Inc. issues semiannual bonds with par value of $1,000. The coupon rate is 7.4%, and investors required rate of return is 8%. a. If the bond matures in 20 years, how much will it sell for today? (3 marks) b. What is the current yield of the bond? (2 marks) 3. A four-year, $1,000 par value bond, pays interest of $70 at the end of the first year, $60 at the end of the second year, and $50 at the end of years three and four. How much will this bond sell for if the required rate of return is 8.2%? (5 marks) 4. What is the value of a 10 year, $1,000 par value bond with a coupon rate of 7% for the first eight years, and 8% for the last two years? The required rate of return is 9%. (6 marks)

Answer rating: 100% (QA)

1 a The bonds coupon payment is calculated as follows Coupon payment Coupon rate x Par value 2 Coupo... View the full answer