Log in
Finance
1
answer
0
watching
74
views

One year ago, Blazer, Inc. issued 17-year bonds at par. The bonds have a coupon rate of 6 percent and pay interest annually. Today, the market rate of interest on these bonds is 8.2 percent. How does the price of these bonds today compare to the issue price (what is the percentage difference and is it higher or lower)?

Watch
1
answer
0
watching
74
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Elin Hessel
Elin HesselLv2
30 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

Bull bank purchased bonds two years ago. These bonds have a par value of $300 million and a coupon rate of 4.75 percent. As of today, they have seven years until they mature. Investors today are requiring a 5 percent yield to maturity.

a. What should be the market price today of these bonds?

b. If you realized yield on these bonds was 4.65 percent, how much did you pay these bonds two years ago?

The Corp. has issued 18-year, 8% semi-annual coupon, noncallablebonds at their par value of $1,000 one year ago. Today, the marketinterest rate on these bonds is 4.5%. What is the current price ofthe bonds? (Hint: the bonds have 17 years to maturity now).

Scandal Inc., plans to issue $5 million of bonds with a coupon rate of 8 percent and 15 years to maturity. The current market interest rates on these bonds are 7 percent. In one year, the interest rate on the bonds will be either 12 percent or 4 percent with equal probability. Assume investors are risk-neutral.

a. If the bonds are noncallable, what is the price of the bonds today? Assume a par value of $1,000 and semiannual payments. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Price of Bonds: $________

b. If the bonds are callable one year from today at $1,050, will their price be greater or less than the price you computed in part a?

Weekly leaderboard

Home
Homework Help 3,900,000
Finance 370,000
Start filling in the gaps now
Log in