11 Jul Accounting
1:
| Lycan, Inc., has 6 percent coupon bonds on the market that have 9 years left to maturity. The bonds make annual payments. |
| Required: |
| If the YTM on these bonds is 8 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Current bond price |
2:
| The Timberlake-Jackson Wardrobe Co. has 7 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments. |
| Required: |
| If the bond currently sells for $1,038.50, what is its YTM? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) |
| Yield to maturity |
3:
| Crossfade Co. issued 15-year bonds two years ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. |
| Required: |
| If these bonds currently sell for 94 percent of par value, what is the YTM? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Yield to maturity |
4:
| Volbeat Corporation has bonds on the market with 10.5 years to maturity, a YTM of 8.4 percent, and a current price of $945. The bonds make semiannual payments. |
| Required: |
| What must the coupon rate be on the bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Coupon rate |
5:
If Treasury bills are currently paying 4.1 percent and the inflation rate is 1.6 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)
| Approximate |
Exact
6:
| Say you own an asset that had a total return last year of 15 percent. Assume the inflation rate last year was 2.5 percent. |
| Required: |
| What was your real return? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
Real return:
7:
| PK Software has 7.5 percent coupon bonds on the market with 22 years to maturity. The bonds make semiannual payments and currently sell for 97 percent of par. |
| Requirement 1: |
| What is the current yield on PK’s bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Current yield |
| Requirement 2: |
| What is the YTM? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Yield to maturity |
| Requirement 3: |
| What is the effective annual yield? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Effective annual yield |
8:
| BDJ Co. wants to issue new 25-year bonds for some much-needed expansion projects. The company currently has 7.8 percent coupon bonds on the market that sell for $1,125, make semiannual payments, and mature in 25 years. |
| Required: |
| What coupon rate should the company set on its new bonds if it wants them to sell at par? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Coupon rate |
9.You find a zero coupon bond with a par value of $10,000 and 12 years to maturity. The yield to maturity on this bond is 4.9 percent. Assume semiannual compounding periods.
What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Price
10.Yan Yan Corp. has a $10,000 par value bond outstanding with a coupon rate of 5.2 percent paid semiannually and 28 years to maturity. The yield to maturity of the bond is 4.3 percent.
What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Price =
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