What should the coupon rate be, if a company wants to issue 10 year semi-annual bonds. The company is CCC rated? Using the file below to complete the bond table and answer the following questions. The excel version is available as an attachment to this assignment for additional analysis. These bonds pay a semi-annual coupon! Security Rating Treasury Treasury Treasury Treasury Treasury Corp 1 Corp 2 Corp 3 Corp 4 A BB AA CCC Years Maturity LSSIS 28m 5 10 20 5 10 20 3 Face Coupon Value Rate $1,000 0.00% $1,000 2.00% $1,000 4.40% $1,000 7.80% $1,000 7.00% $1,000 8.10% $1,000 5.00% $1,000 8.20% $1.000 4.50% Market Price $966.66 $939.06 $932.42 $1,007.12 $908.25 $1,000.00 $678.00 $972.22 $884.00

What should the coupon rate be, if a company wants to issue 10 year semi-annual bonds. The company is CCC rated? Using the file below to complete the bond table and answer the following questions. The excel version is available as an attachment to this assignment for additional analysis. These bonds pay a semi-annual coupon! Security Rating Treasury Treasury Treasury Treasury Treasury Corp 1 Corp 2 Corp 3 Corp 4 A BB AA CCC Years Maturity LSSIS 28m 5 10 20 5 10 20 3 Face Coupon Value Rate $1,000 0.00% $1,000 2.00% $1,000 4.40% $1,000 7.80% $1,000 7.00% $1,000 8.10% $1,000 5.00% $1,000 8.20% $1.000 4.50% Market Price $966.66 $939.06 $932.42 $1,007.12 $908.25 $1,000.00 $678.00 $972.22 $884.00

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 3R

See similar textbooks

Similar questions

a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
A. Table below is information about three USD10000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 14%. Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value. Bond Coupon Rate (%) Maturity (years) 1 8 5 2 14 10 3 16 15 B. Using the Interpolation Method to calculate the YTM for the below Bonds: > The par value USD18000 > Coupon Rate 10% every year > Maturity period 10 years > Market Value of bond USD21800
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) 1 2 3 4 5 Show Transcribed Text B) How could you construct a 1-year forward loan beginning in year 3? (Face Value) C) How could you construct a 1-year forward loan beginning in year 4? (Face Value) Required A Required B Complete this question by entering your answers in the tabs below. Face value Rate of synthetic loan → Show Transcribed Text Price $ 970.93 898.39 836.92 How could you construct a 1-year forward loan beginning in year 3? Note: Round your Rate of synthetic loan answer to 2 decimal places. Required A 776.20 685.42 Required B Face value Rate of synthetic loan Required C 7.85 % Required C How could you construct a 1-year forward loan beginning in year 4? Note: Round your Rate of synthetic loan answer to 2 decimal places. Ċ 13.29 %
Problem: You are given the following data for two bonds with semiannual payments (A and B) Bond Settlement Date B 2/15/2020 2/15/2020 Maturity Date Coupon rate 2/15/2040 2/15/2040 4% 8% Similar bonds with 20 year to maturity sell for 9% coupon rates in the market. a) Calculate the bond value for bond A and B b) Calculate the YTM for bond A and B Bond Valuation Settlement Date 2/15/2020 2/15/2020 Maturity Date Coupon rate Required return Redemption Value Frequency Basis Calculate the PV of the bond in U.S. S 2/15/2040 2/15/2040 8% 4% 4.50% 4.50% 100 100 2 a) Use the Price Function B) Use the Yield Function
Calculate the purchase price of the following bonds. Indicate whether the bonds are priced at a discount, at par or at a premium. Give your answers in dollars and cents to the nearest cent. Face Value Coupon Rate Years to Maturity Market Rate a) $100 r = 6.75% 5 j2 = 6.75% b) $1,000 r = 8% 11 j2 = 6.25% c) $10,000 r = 7% 20 j2 = 8.75% Quoted coupon rates and market rates are nominal annual rates compounded semi-annually. a)Price = $ This bond is priced at:a discountpara premium b)Price = $ This bond is priced at:a discountpara premium c)Price = $ This bond is priced at:a discountpara premium
← The Airfoil Aircraft Company has issued 5% convertible bonds that mature October 1, 2029. Suppose the bonds are issued October 1, 2021, and pay interest each April 1 and October 1. (Click the icon to view the bond data.) Read the requirements. Requirement 1. Assume the bonds are issued at a price of 93.4. Using the straight-line method of amortization for bond discount: a. Calculate interest expense on bonds payable for each semiannual interest payment period. Use two decimal places. (Round intermediary and final calculations to the nearest cent.) The total interest expense each interest period if the bonds are issued at 93.4 is
Caiculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Issue date Dec 15, 1991 Maturity date Dec 15, 2026 Purchase date ১une 15, 2013 Coupon rate (XY 5.50 Market rate (X). 7,4 Assume that • Bond interest is paid semiannually. • The bond was originally issued at its face value. • Bonds are redeemed at their face value at maturity • Market rates of return are compounded semiannually Bond price
The Excel file Immunization Using Individual Bonds contains information about three bonds. Use this data to: Yield to maturity (Expected/Current) 7% Number of Years to Future Liability 8 Future Liability $ 3,000.00 Bond 1 Bond 2 Bond 3 Coupon rate 8.00% 9.000% 7.00% Maturity 9 24 15 Face value 1,000 1,000 1,000 Explain which bond you prefer to use to attempt to immunize this obligation which is due in 8 years. Analyze each bond’s performance in attempting to achieve immunization Please show work in excel and functions/equations used.
Consider the following risk-free bonds available for sale in the bond market (assume annual +Coupons). Bond's maturity Ask Price (per $100 of Coupon rate (in %) face value 1-year bond 100.0040 0.125% 2-year bond 101.2100 2% 3-year bond 101.2140 1.625% Construct the term structure of interest rates for these three periods. b. Your company plans to issue three-year maturity coupon bonds. Based on its excellent credit rating, your company pays a low constant 3% risk premium over the relevant term-structure rates. You plan to issue bonds priced at par (i.e. price = face value). At what level should you plan to set the coupon on your bond to justify this price? c. Now assume that your company wishes to issue 3-year zero coupon bonds. At what price will these bonds sell?
Give typing answer with explanation and conclusion 1- Imagine the bond above displayed the following details: $10,000 Matures: January 31, 2030; Interest of $200 payable June 30 and December 31 of each year. Can you calculate the annual effective interest rate for this bond? a)2% b)4% c)6% d)One cannot tell.
Calculate the purchase price of the $1,000 face value bond using the information given below. (Do not round the intermediate calculations. Round your final answer to 2 decimal places.) Issue date Dec 15, 2013 Maturity date Dec 15, 2043 Purchase date June 15, 2023 Coupon rate (%) Market rate (%) 5.00 6.4 Assume that • Bond interest is paid semiannually. . The bond was originally issued at its face value. Bonds are redeemed at their face value at maturity. • Market rates of return are compounded semiannually. Bond price
You are given the following information. All bonds are from the same issuer (same credit risk). Bond Coupon Rate Maturity Price ($) 6% 1036.17 5% 2 1041.49 C 6% 3 1074.21 All coupon payments are annual and face values are $1000. Answer the following and express rates as a %, to 2 decimal places a) Determine the 1-, 2- and 3-year spot rates from the given prices (Use the Bootstrapping method). 1- Year Spot rate is 2- Year Spot rate is 3- Year Spot rate is b) Compute the implied annual forward rate from year one to year two, i.e., f2 --> c) Compute the implied annual forward rate from year two to year three, i.e., f3 -->