Entries by sospeter mukundi

Katie Pairy Fruits Inc. has a $3,500, 14-year bond outstanding with a nominal yield of 16 percent (coupon equals 16% × $3,500 = $560 per year).

June 18, 2020 in /by

Katie Pairy Fruits Inc. has a $3,500, 14-year bond outstanding with a nominal yield of 16 percent (coupon equals 16% × $3,500 = $560 per year). Assume that the current market-required interest rate on similar bonds is now only 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final […]

 

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Real rate of return 3 % Inflation premium 6 Risk premium 5 Total return 14 %

June 18, 2020 in /by

om Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This return was in line with the required returns by bondholders at that point as described below: Real rate of return 3 % Inflation premium […]

 

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Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 9 percent to 8 percent.

June 18, 2020 in /by

Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 9 percent to 8 percent. a. What is the bond price at 9 percent? Bond price $ b. What is the bond price at 8 percent? Bond price […]

 

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Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 50 years.

June 18, 2020 in /by

Barry’s Steroids Company has $1,000 par value bonds outstanding at 14 percent interest. The bonds will mature in 50 years. If the percent yield to maturity is 11 percent, what percent of the total bond value does the repayment of principal represent? Use Appendix B and Appendix D for an approximate answer but calculate your […]

 

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