You are interested in buying one corporate bond and your broker has offered two corporate bonds for you to consider: 1. Bond A: paying quarterly coupons, with a maturity date of 1 January 2025, an annual coupon rate of 12% and a bond flat price of $90.0 2. Bond B: paying quarterly coupons, with a maturity date of 1 January 2035, an annual coupon rate of 15% and a bond flat price of $100.0 If the settlement date of both bonds is 1 January 2022, which of these two bonds represents the best investment opportunity? nd A
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- QUESTION 2 Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the yield to maturity of the bond? A. 30% B. 0% C. 35.4% D. 100.2%Question 3 (Bond and Equity Valuation) Bond A is a $1,000, 6% quarterly coupon bond with 5 years to maturity. (a) If you bought Bond A today at a yield (APR) of 8%, what is your purchase price? Is this a premium or discount bond? Why? (b) One year later, Bond A's YTM (APR) has gone down to 6% and you sell it immediately after receiving the coupon. (i) What is the current yield? (ii) What is the capital gains yield? (iii) What is the one-year total rate of return (in APR) if the coupons are reinvested at 2% per quarter during the holding period? (iv) Can Bond A’s one-year total rate of return be determined correctly by simply adding up the current yield and the capital gains yield? Explain your answer without calculations.Problem 2.2. A one-year zero-coupon bond with face value of $1,000 is priced at $970. A two-year zero-coupon bond with face value of $1,000 is priced at $940. A three-year bond with face value of $1,000, annual coupons, and 4% coupon rate is priced at $1,012.40. Price a three-year bond with face value of $1,000, annual coupons, and 6% coupon rate (Please show ALL workings)
- Question a The following data relate to a corporate bond which pays coupons semi-annually:Settlement date 01 March 2020Maturity date 31 December 2040Coupon rate 12%Yield to maturity 10%Face value $1,000Percentage of face value paid back to the investor on maturity 100%Using the above data, calculatei. The flat price of the bondii. Accrued interestiii. Invoice price of the bond Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line. .1 InJanuary 2021 you purchased a $20,000 bond from Comcast with a 5.5% coupon rate and a 10-year maturity. In July of 2021, you decided you need to sell this bond in the secondary market, and you learned that the rate offered for $20,000 bonds with a 10-year maturity was now 5.2%. How much were you be able to sell your bond for in July 2021?Question A .Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j2 = 3.65% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be j2 = 4.5% p.a. Assume that this corporate bond has a 9.6% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places. a. 99.016 b. 97.191 c. 55.030 d. 60.418 Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
- Question 4 A bond with a P600, 000 face value has a 7% coupon and a five-year maturity, Find the total of the interest payments paid to the bondholder.Analysis and Application of Knowledge Rossiana Marie, Inc. lists a bond as Ross 9s34, and shows the price as selling for 88.875% of its face value. If your required return rate is 10%. would you buy one of these bonds in 2021? * 5 points Your answer Upload Solution: Rossiana Marie, Inc. lists a bond as Ross 9534, and shows 15 points the price as selling for 88.875% of its face value. If your required return rate is 10%, would you buy one of these bonds in 2021? 1 Add file Intal Corporation bonds have a coupon of 14%. pay interest semiannually. Spoints and mature in 7 years. Your required rate of return for such an investment is 10% annually. How much should you pay for a PHP1.000 Intal Corporation bond? Your answer Upload Solution: Intal Corporation bonds have a coupon of 14%. pay 10 points interest semiannually, and mature in 7 years. Your required rate of return for such an investment is 10% annually. How much should you pay for a PHP1.000 Intal Corporation bond?* 1 Add fileProblem Illustration 1: Valuing Bond Issue Consider a P1,000 par value bond issued by MERALCO with maturity date of 2026 and a stated coupon rate of 8.5%. On January 1, 2007, the bond had 20 years left to maturity, and the market's required yield to maturity for similar rated debt was 7.5%. Based on the market's required yield to maturity, what is the value of the bond? STEP 1: Timing and Amount of cash flows STEP 2: Determine the YTM discount rate STEP 3: Compute for the PV of cash flows 1 Bond Value = Interest (1 + YTM Market) + Principal (1 + YTM Market)" YTM Market
- Problem #1: A bond issued on February 1, 2004 with face value of $37000 has semiannual coupons of 5%, and can be redeemed for par (face value) on February 1, 2025. What is the accrued interest and the market price (the "clean" price) of the bond on November 15, 2006, if the bond's yield on that date is to be 6%? (use actual/actual for accrued interest).QUESTION 3 You are considering three investments: Investment 1: Bond that is selling in the market at $1,200. The bond has a $1,000 par value, pays interest at 15 percent, and is scheduled to mature in 10 years. For bonds of this risk class, you believe that a 12 percent rate of return should be required. Investment 2: Preferred stock ($100 par value) that sells for $90 and pays an annual dividend of $15. Your required rate of return for this stock is 15 percent. Investment 3: Common stock ($35 par value) that recently paid a $4 dividend. The firm’s return on equity is 12.3%. The firm’s earning per share was $6.00 and it paid $3.20 in dividends per share. The stock is selling for $30, and you think a reasonable required rate of return for the stock is 18 percent. a. Calculate the value of each security based on your required rate of return.QUESTION 3 You are considering three investments: Investment 1: Bond that is selling in the market at $1,200. The bond has a $1,000 par value, pays interest at 15 percent, and is scheduled to mature in 10 years. For bonds of this risk class, you believe that a 12 percent rate of return should be required. Investment 2: Preferred stock ($100 par value) that sells for $90 and pays an annual dividend of $15. Your required rate of return for this stock is 15 percent. Investment 3: Common stock ($35 par value) that recently paid a $4 dividend. The firm’s return on equity is 12.3%. The firm’s earning per share was $6.00 and it paid $3.20 in dividends per share. The stock is selling for $30, and you think a reasonable required rate of return for the stock is 18 percent. (a) Calculate the value of each security based on your required rate of return. (b)Which investment(s) should you accept? Why? (c) What is the importance of valuation of bond and stock to the investor? Note: 1Please…