Expected return %_________________
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Showbiz, Inc., has issued eight-year bonds with a coupon of 7.33 percent and semiannual coupon payments. The market’s required
If the above bond is callable after five years at an 10.8 percent premium on the face value, what is the expected return on this bond? (Round intermediate calculations to 2 decimal places, e.g. 1.25 and final answer to 2 decimal places, e.g. 15.25%.)
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- Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) Price 1 $ 998.78 2 880.89 3 815.92 4 752.40 5 685.70 a. Calculate the forward rate of interest for each year. (Round your answers to 2 decimal places.) b. How could you construct a 1-year forward loan beginning in year 3? (Round your Rate of synthetic loan answer to 2 decimal places.) c. How could you construct a 1-year forward loan beginning in year 4? (Round your answers to 2 decimal places.)Showbiz, Inc., has issued eight-year bonds with a coupon of 6.06 percent and semiannual coupon payments. The market’s required rate of return on such bonds is 7.20 percent. a. What is the market price of these bonds? b. If the above bond is callable after five years at an 9.3 percent premium on the face value, what is the expected return on this bond?A newly issued bond pays its coupons once a year. Its coupon rate is 4.3%, its maturity is 10 years, and its yield to maturity is 7.3%. Required: a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6.3% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If you sell the bond after one year when its yield is 6.3%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue-discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the bond after two years, (ii) the bond yield…
- A bond has a par value of $1,000, a time to maturity of 15 years, and a coupon rate of 7.80% with interest paid annually. If the current market price is $780, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.)A Sunfish bond is paying 10 percent interest for 20 years on a semiannual basis. Assume interest rates in the market (yield to maturity) increase from 6 percent to 14 percent. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Enter all amounts as positive value. Round the final answers to 2 decimal places.) a. What is the bond price at 6 percent? Bond price $ b. What is the bond price at 14 percent? Bond price $ c. What would be the percentage return on an investment bought when rates were 6 percent and sold when rates are 14 percent? Return on investment % (Click to select) profit loss (Type answer only)A $1,000 par value bond was issued five years ago at a 10 percent coupon rate. It currently has 8 years remaining to maturity. Interest rates on similar debt obligations are now 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the current price of the bond using an assumption of semiannual payments. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If Mr. Robinson initially bought the bond at par value, what is his percentage capital gain or loss? (Ignore any interest income received. Do not round intermediate calculations and input the amount as a positive percent rounded to 2 decimal places.) c. Now assume Mrs. Pinson buys the bond at its current market value and holds it to maturity, what will be her percentage capital gain or loss? (Ignore any interest income received. Do not round intermediate calculations and input…
- A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? Assume semiannual compounding. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)A $1,000 par value bond was issued five years ago at a 10 percent coupon rate. It currently has 25 years remaining to maturity. Interest rates on similar debt obligations are now 12 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the current price of the bond using an assumption of semiannual payments. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If Mr. Robinson initially bought the bond at par value, what is his percentage capital gain or loss? (Ignore any interest income received. Do not round intermediate calculations and input the amount as a positive percent rounded to 2 decimal places.)Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment? Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in mumerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your…
- Williams Software has 9.2 percent coupon bonds on the market with 18 years to maturity. The bonds make semiannual payments and currently sell for 106.8 percent of par. a. What is the current yield on the bonds? b. What is the YTM of the bonds? c. What is the effective annual yield? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a. Current yield b. YTM c. Effective annual yield % %A firm specializes in buying deep discount bonds (i.e. bonds trading at well below par). The firm is eyeing a bond that pays 8% annual interest and has 17 years remaining to maturity. The bond is currently selling at 35% below par. Required: By what percent will the price of the bonds increase between now and maturity based on semi-annual analysis? Answer% Intermediate calculations must be rounded to 3 decimal places (at least). Input your answer as a percent rounded to 2 decimal places (for example: 28.31%).Pharaoh, Inc. has four-year bonds outstanding that pay a coupon rate of 7.0 percent and make coupon payments semiannually. If these bonds are currently selling at $918.32. What is the yield to maturity that an investor can expect to earn on these bonds? Assume face value is $1000. (Round to 1 decimal) Solve for yield to maturity What is the effective annual yield?