Question

value: 10.00 points You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000. Company (Ticker) Xenon, Inc. (XIC) Kenny Corp. (KС) Williams Co. (WICO) EST $ Vol (000's) 57,380 48,959 43,820 Last Last Yield ?? Price 94.363 ?? 94.915 Coupon 7.200 7.300 Maturity Jan 15, 2038 Jan 15, 2037 Jan 15, 2044 5.50 7.20 ?? What price would you expect to pay for the Kenny Corp. bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) $ 2452.99 Price What is the bond's current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 5.95 % Current yield eBook & Resources References Learning Objective: 06-02 Describe bond values and why they fluctuate. Worksheet

Answer 1

Kenny Corp. The bond price equation is: P = $73(PVIFA 2.75%,42 ) + $2,000(PVIF 2.75%,42) P = $1805.06 + $640 = $2445.60 The current yield is the annual coupon payment divided by the bond price, so: Current yield = $73/ $2,445.60 Current yield = .0299, or 2.99% 5.50 / 2 = 2.75; 21 x 2 = 42