1 a 1000 face value bond currently has a yield to maturity, Ask an Expert

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1. A $1,000 face value bond currently has a yield to maturity of 5.4 percent. The bond matures in 6 years and pays interest semi-annually. The coupon rate is 4 percent. What is the current price of this bond?

2. Best Western has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 8 years, and have a 6 percent coupon rate. The current price is quoted at $1045. What is the yield to maturity?

3. XYZ has a $1000 Face Value 5% Coupon Bond (paid semi-annually). The bond is selling for $937.19 today and matures in 8 years. (The YTM today is 6.0%)

a. What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in 1 year is still 6.0%?

b. What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in 1 year is 5.7%?

4. ABC Co wants to raise $6 million for an expansion project. The company wants to raise this money by selling zero coupon bonds with a par value (face value) of $1000. These bonds would be sold with a Yield to Maturity of 4% per year with semi-annual compounding. How many bonds must ABC sell in order to raise the $6 million dollars?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91730462

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