Bond Valuation

For Investment B: (40 – 5)/ 30= 1.16 standard units= close to 88% to get the 40 million in

b. What would be the value of each bond if they had annual coupon payments?

A bond with an annual coupon of $70 and originally sold at par for $1,000. The current market interest rate (yield to maturity) is 8%. This bond will sell at _______. Assuming no change in market interest rates, the bond will present the holder with capital ________ as it matures.

GE has a face value of $98.40 and the coupon is 0.042%, which is equivalent to $0.00042, which is no money, rounded to the nearest hundredths. The maturity of the bond is 5 years (5/17/2021), so Billy would get $500.00 back from the GE bond issuers. Billy would make a dividend of $8 by buying the bond at a lower price than the returned money. PEP has a face value of $99.60 and the coupon percentage is 0.467%, which is 0.00467 and 0.01 rounded to the nearest hundredths. The maturity is 2 years (04/30/2018), so Billy would get $200.02 back and make a dividend of

a. Calculate the expected return over the 4-year period for each of the three alternatives.

1. A $120,000, 5%, 200-day note dated June 6 is discounted on October 8. The discount period is:

a. What is the CD’s value at maturity (future value) if it pays 10 percent annual interest?

2. St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in marketable securities. If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense?

At what price will the bonds issue? (Do not round PV factors. Round your answer to the nearest dollar amount. Omit the "$" sign in your

a. What would Mrs. Beach have to deposit if she were to use high quality corporate bonds an earned an average rate of return of 7%.

From 15 July 2000 until 15 January 2001 = 6.75% coupon paid. From 15 January 2001 until 31 May 2001 (4.5 months) = 6.75 % x 4.5 months/6 months = 5.06%

Natalie’s grandmother has decided to charge interest of 6% on the note payable extended on November 16. The loan plus interest is to be repaid in 24 months. (Assume that half a month of interest accrued during November.)

b. Generate a graph or table showing how the bond’s present value changes for semi-annually compounded interest rates between 1% and 15%.

5. With respect to b), what would be the effect of the bondization and equitization overlay program on the expected return of the absolute return portfolio? Which contracts would be the most

Describe the differences in interest payments and bond price between a 5 percent coupon bond and a zero coupon bond.