Bond Evaluation flashcards

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USM bonds pay an annual coupon rate of 10%. They have 8 years before maturity. The maturity value is $1,000. The yield to maturity (market interest rate) on these class of bonds is 12%. Determine the price of these bonds. $900.65
Liddy Corporation has bonds that pay a coupon rate of 8% and a maturity value of $1,000. The yield on comparable new bonds is 9.5% The bonds have 7 years before they mature. Determine the value of one of Liddy's bonds. $925.76
Calculate the yield to maturity (on an annual basis) of an 8% coupon, 10 year bond that pays interest semiannually if its price is now $787.17. 12%
Easton, Inc., has two bond issues outstanding, both selling for $701.22. The first issue has a coupon rate of 8% and 20 years to maturity. The second has an identical yield to maturity as the first but only 5 years until maturity. Both issues are payable annually. What is the interest payment on the second issue? $37.12
Robert Baron is considering two 5 year bonds. One pays a coupon rate of 10% and is taxexempt and the other pays a coupon rate of 13% and is fully taxable for Bob at a 34% tax rate. If the tax-exempt bond sells for $1000, at what maximum price must the taxable bond sell for in order to induce Robert to purchase it instead of the tax-exempt (par value is $1000)? $931.77
A major auto manufacturer has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate has now risen to 16%. At what price can these securities be purchased on the market? $571.15
Calculate the price change in a semiannual municipal bond with a coupon rate of 9% and 10 years to maturity when the market rate of interest increases from 8.25% to 10.75% $151.96
The current market price of a Johnson Company bond is $1,305.28. A 10% coupon interest rate is paid semi-annually, and the par value is equal to $1,000. What is the YTM (on an annual basis) if the bonds mature 10 years from today? 6%
Golden bonds pay a semi-annual coupon rate of 10%. They have 8 years before maturity. The maturity value is $1,000. The yield to maturity (market interest rate) on these class of bonds is 10%. Determine the price of these bonds $1013.02
The Banzai Auto Company has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate has now risen to 12.25%. At what price can these securities be purchased on the market? $730.35
King Incorporated has a twenty-year bond with a coupon rate of 12 percent paid semiannually. The market rate of interest is 10.5 percent and the bond has a maturity value of $1,000. Determine the duration of the bond. duration = 8.647
Two bonds have identical terms except that one pays annual coupon payments while the other pays semiannual payments. The coupon rates are 11%, the market yield is 12%, and the time to maturity is 20 years. What is the difference in the prices and duration of the two bonds? Price Difference $23.95, Duration Difference .27 years

USM bonds pay an annual coupon rate of 10%. They have 8 years before maturity. The maturity value is $1,000. The yield to maturity (market interest rate) on these class of bonds is 12%. Determine the price of these bonds.

Liddy Corporation has bonds that pay a coupon rate of 8% and a maturity value of $1,000. The yield on comparable new bonds is 9.5% The bonds have 7 years before they mature. Determine the value of one of Liddy's bonds.

Calculate the yield to maturity (on an annual basis) of an 8% coupon, 10 year bond that pays interest semiannually if its price is now $787.17.

Easton, Inc., has two bond issues outstanding, both selling for $701.22. The first issue has a coupon rate of 8% and 20 years to maturity. The second has an identical yield to maturity as the first but only 5 years until maturity. Both issues are payable annually. What is the interest payment on the second issue?

Robert Baron is considering two 5 year bonds. One pays a coupon rate of 10% and is taxexempt and the other pays a coupon rate of 13% and is fully taxable for Bob at a 34% tax rate. If the tax-exempt bond sells for $1000, at what maximum price must the taxable bond sell for in order to induce Robert to purchase it instead of the tax-exempt (par value is $1000)?

A major auto manufacturer has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate has now risen to 16%. At what price can these securities be purchased on the market?

Calculate the price change in a semiannual municipal bond with a coupon rate of 9% and 10 years to maturity when the market rate of interest increases from 8.25% to 10.75%

The current market price of a Johnson Company bond is $1,305.28. A 10% coupon interest rate is paid semi-annually, and the par value is equal to $1,000. What is the YTM (on an annual basis) if the bonds mature 10 years from today?

Golden bonds pay a semi-annual coupon rate of 10%. They have 8 years before maturity. The maturity value is $1,000. The yield to maturity (market interest rate) on these class of bonds is 10%. Determine the price of these bonds

The Banzai Auto Company has experienced a market re-evaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8% (paid semiannually). The required rate has now risen to 12.25%. At what price can these securities be purchased on the market?

King Incorporated has a twenty-year bond with a coupon rate of 12 percent paid semiannually. The market rate of interest is 10.5 percent and the bond has a maturity value of $1,000. Determine the duration of the bond.

Two bonds have identical terms except that one pays annual coupon payments while the other pays semiannual payments. The coupon rates are 11%, the market yield is 12%, and the time to maturity is 20 years. What is the difference in the prices and duration of the two bonds?

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