25 Jun WHAT IS THE VALUE OF THE BOND IF THE INTEREST WERE TO BE PAID ANNUALLY INSTEAD OF SEMIANNUALLY?
(A) Holiday Hiatus a luxury vacation rental company issued 15 year bonds t Show more EXPECTED RATE OF RETURN (A) Holiday Hiatus a luxury vacation rental company issued 15 year bonds to raise the capital needed to construct a five-star all-inclusive tropical resort on the island of Bermuda. Those bonds are selling in the open market for $1405 a premium in excess of their $1000 par value paying 7% interest annually. If the bonds are purchased at the market price what is the expected rate of return? BOND VALUATION (B) Caiphus Inc. bonds have a six percent coupon rate. The interest is paid semiannually and the bonds mature in eight years. Their par value is one thousand dollars. If the investors required rate of return is four percent what is the value of the bond? What is the value of the bond if the interest were to be paid annually instead of semiannually? YIELD TO MATURITY (C) You own a 10 year bond that pays 6% interest annually. The par value is $1000 and the market price is $970. What is the yield to maturity of the bond? Thanks. Show less
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