Nike has bonds outstanding with five years to maturity and semiannual interest payments. The bonds pay...

Question

Question

business finance

Answer 1

Answer #1

Computation Of Bond Price

a	Semi-annual Coupon Amount	$ 25.00
	($1000*5%/2)
b	Present Value Annuity Factor for (10 Years,4.5%)	7.912718
c	Present Value Of Annual Interest (a*b)	$ 197.82
d	Redemption Value	$ 1,000.00
e	Present Value Factor Of (10 Years,4.5%)	0.64393
g	Present Value Of Redemption Amount (d*e)	$ 643.93
f	Price Of The Bond (c+g)	$ 841.75


Annual coupon amount = $25*2 = $50

Current Yield = Coupon amount / bond price

=50/841.75

=5.94%

Correct Option : None of the above

Answer 2

Similar Homework Help Questions

Your firm plans to issue bonds with ten years to maturity and semiannual interest payments. The...

Your firm plans to issue bonds with ten years to maturity and semiannual interest payments. The bonds are currently priced at $985 per bond and have a $1,000 par value. The bonds pay a 12% coupon rate. What is the bond's annual yield to maturity? 6.21% O 12.26% 24.41% O None of the above
Madsen Motors's bonds have 6 years remaining to maturity. Interest is paid annually, they have a...

Madsen Motors's bonds have 6 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 10%, and the yield to maturity is 11%. What is the bond's current market price? Round your answer to the nearest cent. $ Nesmith Corporation's outstanding bonds have a $1,000 par value, a 10% semiannual coupon, 14 years to maturity, and a 14% YTM. What is the bond's price? Round your answer to the nearest cent....
Sounds Nice industries has a bond outstanding with 15 years to maturity, an 8.25 nominal coupon, semiannual payments, an...

Sounds Nice industries has a bond outstanding with 15 years to maturity, an 8.25 nominal coupon, semiannual payments, and a $1000 par value. The bond has a 6.50 Yield to maturity, but it can be called in 6 years at a price of $1045. What is the bond's Yield to call?

Sounds Nice industries has a bond outstanding with 15 years to maturity, an 8.25 nominal coupon, semiannual payments, an...

Sounds Nice industries has a bond outstanding with 15 years to maturity, an 8.25 nominal coupon, semiannual payments, and a $1000 par value. The bond has a 6.50 Yield to maturity, but it can be called in 6 years at a price of $1045. What is the bond's Yield to call?
Bond Valuation with Annual Payments Jackson Corporation's bonds have 12 years remaining to maturity. Interest is...

Bond Valuation with Annual Payments Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. The bonds have a yield to maturity of 5%, what is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent.
1). Merton enterprises has bonds on the market making annual payments, with 13 years to maturity,...

1). Merton enterprises has bonds on the market making annual payments, with 13 years to maturity, $1,000 par value, and selling for $825. At this price, the bonds yield 7 percent. what must the coupon rate be on Merton's bonds? 2). Bonds of Zello Corporation with a par value of $1,000 sell for $1,080, mature in 18 years, and have a 7% annual coupon rate paid annually, what is the yield to maturity? what is the current yield? what is...

Arco industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual...

Arco industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 8.40% yield to maturity. But it can be called in 6 years at a price of $1,045. What is the bonds yield to call?
Arco industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual...

Arco industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 7.50% yield to maturity. But it can be called in 6 years at a price of $1,045. What is the bonds yield to call?
Madsen Motors's bonds have 11 years remaining to maturity. Interest is paid annually; they have a...

Madsen Motors's bonds have 11 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9%; and the yield to maturity is 5%. What is the bond's current market price? Round your answer to the nearest cent.

Madsen Motors's bonds have 7 years remaining to maturity. Interest is paid annually; they have a...

Madsen Motors's bonds have 7 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9%; and the yield to maturity is 5%. What is the bond's current market price? Round your answer to the nearest cent. $