Finance Homework

Anonymous
timer Asked: Feb 5th, 2019
account_balance_wallet $15

Question Description

Need help with finance homework. There're 10 questions in the attached file. Please show work & provide clear explanation as to how to get the answers.

Q1 Sunland Corp is issuing a 10-year bond with a coupon rate of 10 percent. The interest rate for similar bonds is currently 9 percent. Assuming annual payments, what is the value of the bond? (Round answer to 2 decimal places, e.g. 15.25.) Q2 Sheridan, Inc., has issued a three-year bond that pays a coupon rate of 8.5 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.2 percent, what is the market value of the bond? (Round answer to 2 decimal places, e.g. 15.25.) Q3 Susan Wilson 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 8.2 percent. Assume annual coupon payments. What is the current value of this bond? (Round answer to 2 decimal places, e.g. 15.25.) Q4 Ten-year zero-coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interest is compounded semiannually. If similar bonds in the market yield 12.0 percent, what is the value of these bonds? (Round answer to 2 decimal places, e.g. 15.25.) Q5 Blossom Real Estate Company management is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is 9.6 percent? (Round answer to 2 decimal places, e.g. 15.25.) Q6 Mary Smith is looking to invest in a three-year bond that makes semi-annual coupon payments at a rate of 5.225 percent. If these bonds have a market price of $970.00, what yield to maturity can she expect to earn? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.) Q7 Mark Harris bought 10-year, 12.4 percent coupon bonds issued by the U.S. Treasury three years ago at $908.72. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $820.11, what is his realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.) Q8 Carla Vista, Inc., has outstanding bonds that will mature in six years and pay an 8 percent coupon semiannually. If you paid $1,009.96 today and your required rate of return was 7.1 percent. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25.) Q9 Ivanhoe Corp. management plans to issue seven-year zero coupon bonds. It has learned that these bonds will sell today at a price of $443.46. What is the yield to maturity on these bonds? (Round answer to 3 decimal places, e.g. 15.251%.) Q10 Pharoah, Inc., has four-year bonds outstanding that pay a coupon rate of 7.1 percent and make coupon payments semiannually. If these bonds are currently selling at $917.890. What is the yield to maturity that an investor can expect to earn on these bonds? (Round answer to 1 decimal place, e.g. 15.2%.) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.) Effective annual yield %

Tutor Answer

mickeygabz
School: Rice University

See attached. Question 8 is incomplete. Send it so I can update

Q1 Sunland Corp is issuing a 10-year bond with a coupon rate of 10 percent. The interest rate for
similar bonds is currently 9 percent. Assuming annual payments, what is the value of the
bond? (Round answer to 2 decimal places, e.g. 15.25.)

C = coupon payment = $100.00 (Par Value * Coupon Rate)
n = number of years = 10
i = market rate, or required yield = 9.000% = 0.09
k = number of coupon payments in 1 year = 1
P = value at maturity, or par value = 1000
1

1βˆ’(

𝑖 π‘›π‘˜
(1+ )
π‘˜
𝑖
π‘˜

𝐢

Market value = *
π‘˜

)
𝑃

+

𝑖 π‘›π‘˜
π‘˜

(1+ )

1
0.09 10βˆ—1
(1+
)
1
0.09
1

1βˆ’(

Market value =

100
1

*

)
1000

+

(1+

0.09 10βˆ—1
)
1

= $1064.18

Q2 Sheridan, Inc., has issued a three-year bond that pays a coupon rate of 8.5 percent. Coupon
payments are made semiannually. Given the market rate of interest of 4.2 percent, what is the
market value of the bond? (Round answer to 2 decimal places, e.g. 15.25.)

C = coupon payment = $85.00 (Par Value * Coupon Rate)
n = number of years = 3
i = market rate, or ...

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Anonymous
Top quality work from this guy! I'll be back!

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