Test bank chapter 7 - CHAPTER 7 BOND AND THEIR VALUATION 2,...

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CHAPTER 7 BOND AND THEIR VALUATION 2, Ken Williams Ventures' recently issued bonds that mature in 15 years. They have a par value of $1,000 and an annual coupon of 6%. If the current market interest rate is 8%, at what price should the bonds sell? a. $801.80 b. $814.74 c. $828.81 d. $830.53 e. $847.86 4, Bauer Inc's bonds currently sell for $1,275 and have a par value of $1,000. They pay a $120 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,120. What is their yield to maturity (YTM)? a. 8.78% b. 8.99% c. 9.15% d. 9.33% e. 9.41% 5, Highfield Inc's bonds currently sell for $1,275 and have a par value of $1,000. They pay a $120 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,120. What is their yield to call (YTC)? a. 7.00% b. 7.13% c. 7.28% d. 7.31% e. 7.42% 8, Travis Corp.'s bonds currently sell for $1,050. They have an 8% annual coupon rate and a 20-year maturity, but they can be called in 5 years at $1,120. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to
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This note was uploaded on 01/18/2011 for the course FINANCE fin300 taught by Professor Thomasrhee during the Fall '10 term at CSU Long Beach.

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Test bank chapter 7 - CHAPTER 7 BOND AND THEIR VALUATION 2,...

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