SA4.docx - Question 1 7 out of 7 points Use the following...

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Question 1 7 out of 7 points Use the following information for questions 1 to 5. Your broker offers to sell you the bonds of Multinational Company. These bonds have 20 years remaining to maturity and have a coupon rate of 8%. The coupon is paid semiannually. How much will you be willing to pay for this bond if you require a 9% rate of return? Selected Answer: $907. 99 Question 2 7 out of 7 points What would be the market price of the bond if changes in market conditions cause the required rate of return to drop from 9% to 7%? Selected Answer: 1,106. 78 Question 3 7 out of 7 points What is the percent change in price due to the drop in the required rate of return? Selected Answer: 21.89 % Question 4 7 out of 7 points What would be the market price of the bond if changes in market conditions cause the required rate of return to rise from 9% to 10.5%? Selected Answer: $792. 66 Question 5 7 out of 7 points What is the percent change in price due to the increase in the required rate of return compared to price in Q1? Selected Answer: 12.70 % Question 6 7 out of 7 points Use the following information for questions 6 and 7. Republic of Banana Inc. bonds are selling in the market for $908.48. These bonds carry a 9% coupon paid semiannually, and have 10
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years remaining to maturity? What is the bond’s yield to maturity? Selected Answer: 10.50 % Question 7 7 out of 7 points What is the effective yield of Republic of Banana, Inc. bond? Selected Answer: 10.78 % Question 8 7 out of 7 points Use the following information for questions 8 to 10.
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  • Fall '15
  • Yash R. Puri
  • semiannually

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