Mango Company bonds pay a semiannual coupon rate of 6.4%. They have eight years to maturity and face value, or par, of $1,000. Compute the value of Mango bonds if investors' required rate of return is 5%.
A) $1,090.48
B) $883.66
C) $1,006.83
D) $950.00
As interest rates, and consequently investors' required rates of return, change over time, the ________ of outstanding bonds will also change.
A) maturity date
B) coupon interest payment
C) par value
D) price
Terminator Bug Company bonds have a 14% coupon rate. Interest is paid semiannually. The bonds have a par value of $1,000 and will mature 10 years from now. Compute the value of Terminator bonds if investors' required rate of return is 12%.
A) $1,114.70
B) $1,149.39
C) $894.06
D) $1,000.00
Brookline, Inc. just sold an issue of 30-year bonds for $1,107.20. Investors require a rate of return on these bonds of 7.75%. The bonds pay interest semiannually. What is the coupon rate of the bonds?
A) 7.750%
B) 11.072%
C) 9.375%
D) 8.675%
Applebee sold an issue of 30-year, $1,000 par value bonds to the public. The coupon rate of 8.75% is payable annually. It is now five years later, and the current market rate of interest is 7.25%. What is the current market price (intrinsic value) of the bonds? Round off to the nearest $1.
A) $715
B) $1,171
C) $1,225
D) $697
Six years ago, Colt, Inc. sold an issue of 30-year, $1,000 par value bonds. The coupon rate of 5.25% is payable annually. Investors presently require a rate of return of 8.375%. What is the current market price (intrinsic value) of the bonds? Round off to the nearest $1.
A) $1,050
B) $932
C) $681
D) $1,111
Blue's Chips Inc. has a $1,000 par value bond that is currently selling for $1,300. It has an annual coupon rate of 7%, paid semiannually, and has nine years remaining until maturity. What is the annual yield to maturity on the bond? (Round to the nearest whole percentage.)
A) 3.15%
B) 1.57%
C) 3.12%
D) 6.24%
You are considering the purchase of Hytec bonds that were issued 14 years ago. When the bonds were originally sold, they had a 30-year maturity and a 14.375% coupon interest rate that is payable semiannually. The bond is currently selling for $1,508.72. What is the yield to maturity on the bonds?
A) 8.50%
B) 14.38%
C) 11.11%
D) 7.67%
Aurand, Inc. has outstanding bonds with an 8% annual coupon rate paid semiannually. The bonds have a par value of $1,000, a current price of $904, and will mature in 14 years. What is the annual yield to maturity on the bond?
A) 15.80%
B) 10.47%
C) 9.24%
D) 7.90%
E) 4.62%
