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problem1: Ciza Inc. raised 100 million dollar by floating corporate bonds. Each bond paid a coupon of 7% with a Par Value of 1000.00 dollar and will mature in four years.

Required

[A] Holding everything constant and assuming that the coupon is paid on a semiannual basis, determine the intrinsic value of the bond to you? Discuss your answer

[B] Now suppose yearly coupon payments but 20 years remaining to maturity, determine the value of the bond? describe your answer.

[C] find out the current market value of the bond if your required rate of return is 14%.

[D] find out the bond’s current yield? describe your answer.

problem2: Zota In, has a bond issue outstanding with eight years remaining to maturity, a coupon rate of 10% with interest paid yearly, and a Par Value of 1000 dollar.

Required

If the current market price of the bond is $814.45, find out the bond’s yield to maturity? Express your answer.

problem3: Hilo Inc. of Chandler, Arizona has floated some zero coupon bonds to finance its capital expenditures. The Par Value of each bond is $1000.

Required

[A] Assuming a market price of $300 with a maturity of 30 years, determine and discuss the bond’s yield-to-maturity.

[B] Suppose a holding period of 10 years and a yield-to-maturity of 10%, determine and discuss the bond’s current market price.

[C] Suppose a market price of $300 and a yield of maturity of 8%, estimate and discuss the holding period.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918788

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