A BOND PROMISES / TUTORIALOUTLET DOT COM

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A BOND PROMISES / TUTORIALOUTLET DOT COM
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A BOND PROMISES / TUTORIALOUTLET DOT COM

• A bond promises
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• Suppose a bond promises to pay interest of 25
  every six months and repay principal of 1,000 at
  maturity in 30 years. If the market interest rate
  is 7, calculate the bond price.
• Assume a corporate bond selling at 1,205.16
  matures in 6 years at a par value of 1,000 and
  pays a 9 coupon in the form of two semi annual
  interest payment s per year. Compute the bonds
  yield to maturity.
• Suppose a 7 coupon bond with a term to maturity
  of 10 years is priced at 1,050. The bond can be
  called in 3 years at a call price of par plus one
  year of interest payments. Compute the yield to
  call of the bond.
• Suppose a company has common stock that pays a
  dividend of 0.1 0 per year and has a market
  price of 20 per share. Also assume that the
  companys 1,000 p ar value, 10.5 convertible
  bond sells at a market quote of 100, and has a
  conversion ratio of 301. Calculate the bonds
  conversion value.

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