Question: Here are data on $1,000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer
Here are data on $1,000 par value bonds issued by Microsoft, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questions: a. Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsoft, 4.5 percent; GE Capital, 9.5 percent; and Morgan Stanley, 10 percent; where: b. The bonds are selling for the following amounts: Microsoft GE Capital $1,089 $450 Morgan Stanley $839 What are the expected rates of return for each bond? c. How would the value of the bonds change if (1) your required rate of return (r) increased 2 percentage points or (2) decreased 2 percentage points? Evnloin the implications of your aneware in nart in torme of interact rate rick nromium honde and discount honde Data table a. If your required rate of return on the Microsoft bond is (Round to the nearest cent.) Click on the following icon in order to copy its contents into a spreadsheet.) oupon interest rate MICROSOFT 4.75% GE CAPITAL 3.75% MORGAN STANLEY 4.25% ears to maturity 28 18 6 Print Done
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