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Homework answers / question archive / Please help explain and solve the following: Thank you!Bond Valuation with Annual Payments 1)Williams Corporation's bonds have 8 years remaining to maturity
Please help explain and solve the following: Thank you!Bond Valuation with Annual Payments
1)Williams Corporation's bonds have 8 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 8%. What is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent.
Answer: $_____________
2)Yield to Maturity for Annual Payments
Ron's 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 10%. The bonds sell at a price of $850. What is their yield to maturity? Round your answer to two decimal places.
Answer: _________ %
3) Maturity Risk Premium
The real risk-free rate is 2%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 5.3%. What is the maturity risk premium for the 2-year security? Round your answer to one decimal place.
Answer: ___________%
4)Bond Valuation with Semiannual Payments Andrew's Rentals has issued bonds that have a 9% coupon rate, payable semiannually. The bonds mature in 16 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds? Round your answer to the nearest cent.
Answer: $________
