Kessen Inc.'s bonds mature in 7 years, have a par value of $1,000, and make an annual coupon payment of $70. The market interest rate for the bonds is 8.5%. What is the bond's price? A) $923.22 B) $946.30 C) $969.96 D) $994.21 E) $1,019.06
The YTMs of three $1,000 face value bonds that mature in 10 years and have the same level of risk are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT? A) since the bonds have the same ytm, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity. B) bond c sells at a premium (its price is greater than par), and its price is expected to increase over the next year. C) bond a sells at a discount (its price is less than par), and its price is expected to increase over the next year. D) over the next year, bond a's price is expected to decrease, bond b's price is expected to stay the same, and bond c's price is expected to increase. E) bond a's current yield will increase each year.
Noncallable bonds that mature in 10 years were recently issued by Sternglass Inc. They have a par value of $1,000 and an annual coupon of 5.5%. If the current market interest rate is 7.0%, at what price should the bonds sell? A) $829.21 B) $850.47 C) $872.28 D) $894.65 E) $917.01
One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity? A) $1,077.01 B) $1,104.62 C) $1,132.95 D) $1,162.00 E) $1,191.79