15. Tyson Inc. is planning to offer a $1,000 par value 18-year maturity bond with a coupon interest rate that changes every 6 years. The coupon rate for the first six years is 8.75 percent, 10.75 percent for the next 6years, and 12.75 percent for the final 6 years. If you require an 18 percent rate of return on a bond of this quality and maturity, what is the maximum price you would pay for the bond? (Assume interest is paid annually at the end of each year.)
15. Tyson Inc. is planning to offer a $1,000 par value 18-year maturity bond with a coupon interest rate that changes every 6 years. The coupon rate for the first six years is 8.75 percent, 10.75 percent for the next 6years, and 12.75 percent for the final 6 years. If you require an 18 percent rate of return on a bond of this quality and maturity, what is the maximum price you would pay for the bond? (Assume interest is paid annually at the end of each year.)
Related questions
2.
Wine and Roses, Inc. offers a 6.0 percent coupon bond with semiannual payments and a yield to maturity of 6.91 percent. The bonds mature in 12 years. What is the market price of a $1,000 face value bond?
| $1,410.62 | |
| $1,442.55 | |
| $926.59 | |
| $1,023.89 | |
| $1,484.04 |
| 4. The Lo Sun Corporation offers a 6.0 percent bond with a current market price of $788.50. The yield to maturity is 8.40 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures? | ||||||||||
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5.
A bond that pays interest annually yields a rate of return of 6.75 percent. The inflation rate for the same period is 2 percent. What is the real rate of return on this bond?
2.00 percent
4.66 percent
8.75 percent
3.38 percent
1.05 percent
