1-3 10) A$5000 bond with a coupon rate of 52% paid semiannually has ten years to
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1-3 10) A$5000 bond with a coupon rate of 52% paid semiannually has ten years to maturity and ayieldL to maturity of 7 If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price ofthe bond?" ror%)boom uoY .anudoup eurod ow, o1afT·ansoq 8r drow Ay The price of the bond will rise by $271.04gm B)'The price of the bond will fall by $32324 C) The price of the bond will fall by $271.04.D The price of the bond will rise by $379.45. 11; What is the coupon rate of a ten-year, $10,000 bond with semiannual coupons and a price of $8483 3476, if it has a yield to maturity of 6.8g A) 3.75% B) 4.685% C) 6.56% D) 5.62% 12) The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity 12) in three years. The bond certificate indicates that the stated coupon rate for this bond is U% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $1056.82, then the YTM for this bond is closest to A)6.20% B) 8.67% C) 7.43% D) 5.0% 13) 13) Which of the following bonds will be most sensitive to a change in interest rates if all bonds have the same initial yield to maturity? A) a ten-year bond with a $1,000 face value whose coupon rate is 7.4% APR paid semiannually E) a ten-year bond with a $1,000 face value whose coupon me is S8% APR tad ernan ally C) a 20-year bond with a $1,000 face value whose coupon rate is 7.4% APR paid semiannually D) a 20-year bond with a S1,000 face value whose coupon me i, S.8% APR paid emamally 14) 14, A firm issues 5-year bonds with a coupon rate of 4.4%, paid semiannually. The credit spread for his firm's 5-year debt is 1.2%, New 5-year Treasury notes are being issued at par with a coupon rate of 4.7%. what should the price or the firm's outstanding 5-year bonds be ir their face value is $1,000? A) $1200 B) $1310.20 C)S748.69 D) $935.86 15) You expect K T industries (KTI) will have earnings per share of $6 this year and expect that they 15) will pay out $2.50 of these earnings to shareholders in investments is 13% and their equity cost of is closest the form of a dividend. KTT's return on new capital is 1 196The value of a share of KTI's stock today B) $73.17 C) $87.80 D) $29.27 16) Rylan Industries is expected to pay a dividend of $3.30 year for the next four years. If the current 16) price of Rylan stock is S31.43, and Rylan's equity cost of capital is 15%, what price would you expect Rylan's stock to sell for at the end of the four years? A) $22.81 B) $28.51 C) 531.32 D) $79.83 17, JRN Enterprises just announced that it plans to cut its dividend frorn S225 to S100 per share and use the extra funds to expand its operations. Prior to this announcement, JRNs dividends were expected to grow indefinitely at 4% per year and JRN's stock was trading at S25.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement 17. )$11.33 B) $20.73 C) $25.50 D) $46.64Explanation / Answer
14)
1 Par value (FV) $ 1,000 2 Coupon rate 4.40% 3 Number of compounding periods per year 2 4 = 1*2/3 Interest per period (PMT) $ 22.00 5 Number of years to maturity 5 6 = 3*5 Number of compounding periods till maturity (NPER) 10 7 Market rate of return/Required rate of return 5.90% 4.7%+1.2% 8 = 7/3 Market rate of return/Required rate of return per period (RATE) 2.95% Bond price PV(RATE,NPER,PMT,FV)*-1 Bond price $ 935.86Related Questions
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