Question

Hi I have 2 Questions I need help on.

Chapter 5 – Hello I need help with the

following 4 questions on Business Finance. 

Q1.) A General Power bond carries a coupon rate of 8.7%, has 9 years until maturity, and sells at a yield to maturity of 7.7%. (Assume annual interest payments.)

a. What interest payments do bondholders receive each year?

 b. At what price does the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price: ?

 c. What will happen to the bond price if the yield to maturity falls to 6.7%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price will ___?____ by _____?_______

Q2.) Consider three bonds with 5.90% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years.

a. What will be the price of the 4-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ?

b. What will be the price of the 8-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ? 

c. What will be the price of the 30-year bond if its yield increases to 6.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ?

d. What will be the price of the 4-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ?

e. What will be the price of the 8-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ?

f. What will be the price of the 30-year bond if its yield decreases to 4.90%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond Price: ?

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