Babco is a property manager. On 1 June 2012, it listed 1,000 bonds carrying a coupon...
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Babco is a property manager. On 1 June 2012, it listed 1,000 bonds carrying a coupon of [6.4 percent p.a. with interest paid semi-annually at a face value of $100 and maturing on 31 May 2015. The bonds were issued at a yield set 2.09 percent higher than the 10-year Australian government bond yield (which was running at 4.00 percent p.a. in 2012). Requirements. Answer the following questions: Q1. What is the semi-annual coupon payment? Q2. What is the semi-annual yield (in percent)? Q3. What is the present value of interest payments on one bond? Q4. What is the present value of the face value (principal) on one bond? Q5. What is the total present value of the bond issue? Babco is a property manager. On 1 June 2012, it listed 1,000 bonds carrying a coupon of [6.4 percent p.a. with interest paid semi-annually at a face value of $100 and maturing on 31 May 2015. The bonds were issued at a yield set 2.09 percent higher than the 10-year Australian government bond yield (which was running at 4.00 percent p.a. in 2012). Requirements. Answer the following questions: Q1. What is the semi-annual coupon payment? Q2. What is the semi-annual yield (in percent)? Q3. What is the present value of interest payments on one bond? Q4. What is the present value of the face value (principal) on one bond? Q5. What is the total present value of the bond issue?
Expert Answer:
Answer rating: 100% (QA)
Q1 The semiannual coupon payment is 64 per year divided by 2 since interest is paid semiannually so Semiannual coupon payment 64 2 x 100 320 Therefore ... View the full answer
Related Book For
Financial Accounting: A Business Process Approach
ISBN: 978-0136115274
3rd edition
Authors: Jane L. Reimers
Posted Date:
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