New Business Ventures, Incorporated, has an outstanding perpetual bond with a coupon rate of 11 percent that can be called in one year. The bond makes annual coupon payments and has a par value of $1,000. The call premium is set at $125 over par value. There is a 60 percent chance that the interest rate in one year will be 13 percent, and a 40 percent chance that the interest rate will be 9 percent. If the current interest rate is 11 percent, what is the current market price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current market price $ 1,000.00
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- New Business Ventures Inc. has an outstanding perpetual bond with a 11 percent coupon rate that can be called in one year. The bond makes annual coupon payments. The call premium is set at $140 over par value. There is a 35 percent chance that the interest rate in one year will be 13 percent, and a 65 percent chance that the interest rate will be 8 percent. If the current interest rate is 11 percent, what is the current one-year market price of the bond? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) Price $New Business Ventures Inc. has an outstanding perpetual bond with a 13 percent coupon rate that can be called in one year. The bond makes annual coupon payments. The call premium is set at $200 over par value. There is a 35 percent chance that the interest rate in one year will be 15 percent, and a 65 percent chance that the interest rate will be 12 percent. If the current interest rate is 13 percent, what is the current one-year market price of the bond? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) $1,033.48 x PriceCarries Clothes, Inc. has a five -year bond outstanding that pays $60 annually. The face value of each bond is $1,000, and the bond sells for $890. Use semi- annual interest payments if it applies. What is the bond’s coupon rate? What is the current yield? What is the yield to maturity?
- New Business Ventures, Incorporated, has an outstanding perpetual bond with a coupon rate of 11 percent that can be called in one year. The bond makes annual coupon payments and has a par value of $1,000. The call premium is set at $125 over par value. There is a 60 percent chance that the interest rate in one year will be 13 percent, and a 40 percent chance that the interest rate will be 9 percent. If the current interest rate is 11 percent, what is the current market price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) > Answer is complete but not entirely correct. Current market price $ 166.67 XBA Corp is issuing a 10-year bond with a coupon rate of 8 percent. The interest rate for similar bonds is currently 6 percent. Assuming annual payments, what is the value of the bond? Knight, Inc., has issued a three-year bond that pays a coupon rate of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond? Diane Carter is interested in buying a five-year zero coupon bond with a face value of $1,000. She understands that the market interest rate for similar investments is 9 percent. Assume annual coupon payments. What is the current value of this bond? Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.875 percent. If these bonds have a market price of $981.13, what yield to maturity can she expect to earn? Rudy Sandberg wants to invest in four-year bonds that are currently priced at $868.43. These bonds have a coupon rate of 6 percent and make…Enterprise, Inc. bonds have a 9 percent annual coupon rate. The interest is paid semiannually and the bond mature in eight years. Their par value is $1,000. If the market’s required yield to maturity on a comparable-risk bond is 8 percent, what is the value of the bond? What is its value if the interest is paid annually? How to calculate this using mathematical calculation with formulas in finance?
- Oklahoma Instruments has a bond issue outstanding that pays $60 annually. It has a face value of $1,000, and it will mature in eight years. Similar bonds are priced to yield 6.5%. What would you expect this bond to sell for? If you held this bond until it matures what would your investment yield?A company is planning to issue perpetual, callable bonds with a coupon rate of 8% paid annually, and a par value of $1,000. The nominal interest rate on these bonds will be 9% for the next year. In one year, the nominal rate on the bonds will be either 10% with probability 0.6, or 8% with probability 0.4. The bonds are callable at $1200. Assuming the bonds are called if the interest rate decreases, what is the price of the callable bond today?Bandon Manufacturing intends to issue callable, perpetual bonds with annual coupon payments and a par value of $1, 000. The bonds are callable at $1, 230. One year interest rates are 8 percent. There is a 60 percent probability that long-term interest rates one year from today will be 10 percent, and a 40 percent probability that they will be 8 percent. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in order to sell at par value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
- Linz Stylers intends to issue perpetual callable bonds with annual coupon payments. The bonds are callable at $1,250. One-year interest rates are 11 percent. There is a 60 percent probability that long-term interest rates one year from today will be 13 percent, and a 40 percent probability that long-term interest rates will be 9 percent or even lower. Assume that if interest rates fall, the fall will be sufficient for the bonds to be called. What coupon rate should the bonds have in order to sell at par value?Oriole, Inc., has bonds outstanding that will mature in eight years. The bonds have a face value of $1,000. These bonds pay interest semiannually and have a coupon rate of 4.6 percent. If the bonds are currently selling at $883.92, what is the yield to maturity that an investor who buys them today can expect to earn? Yield to maturity? What is the effective annual yield?Singtel recently issued a graded investment bond. The bond has a $1,000 par value which will mature in 12 years’ time. It has a coupon interest rate of coupon of 11% and pays interest annually. As an investor, you are to determine the following: i. Calculate the value of the bond if the required rate of return is 11 percent. ii. Calculate the value of the bond if the required rate of return is 15 percent. iii. Based on the above findings in part (i) and (ii) above, and discuss the relationship between the coupon interest rate on a bond and the required return and the market value of the bond relative to its par value. iv. Identify two possible reasons that could cause the required return to differ from the coupon interest rate.