HW2 - face value. If the price of the bond is $850, what is...

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Homework #2 BUS241 Bonds Note: Assume that all of these bonds pay semi-annually. Use 365 days per year to calculate each maturity date. 1. MCD has issued bonds with 15 years to maturity, a 6% coupon rate, and $1,000 face value. If your required rate of return is 8% and the bonds pay semi-annually, what is the price of these bonds? 2. HP has issued bonds with 10 years to maturity, a 15% coupon rate, and $1,000
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Unformatted text preview: face value. If the price of the bond is $850, what is the yield-to-maturity? 3. What is the current yield on these 10-year HP bonds? 4. What is the yield-to-call if the bonds can be called in 5 years at a call premium of $1,200? 5. Given the above information, which bond do you expect would have a lower rating, MCD or HP?...
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