Bond valuation

Madsen Motors's bonds have 7 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9.5%; and the yield to maturity is 12%. What is the bond's current market price? Round your answer to the nearest cent.
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Yield to maturity and future price
A bond has a $1,000 par value, 8 years to maturity, and a 6% annual coupon and sells for $930.
a. What is its yield to maturity (YTM)? Round your answer to two decimal places.

 %
b. Assume that the yield to maturity remains constant for the next 5 years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.

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Bond valuation
Nesmith Corporation's outstanding bonds have a $1,000 par value, a 11% semiannual coupon, 16 years to maturity, and an 8.5% YTM. What is the bond's price? Round your answer to the nearest cent.
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Bond valuation
Madsen Motors's bonds have 7 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9.5%; and the yield to maturity is 12%. What is the bond's current market price? Round your answer to the nearest cent.
 
Bond valuation
An investor has two bonds in his portfolio that both have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year.
Assume that only one more interest payment is to be made on Bond S at its maturity and that 19 more payments are to be made on Bond L.
a. What will the value of the Bond L be if the going interest rate is 4%? Round your answer to the nearest cent.
$ 

What will the value of the Bond S be if the going interest rate is 4%? Round your answer to the nearest cent.
$ 

What will the value of the Bond L be if the going interest rate is 10%? Round your answer to the nearest cent.
$ 

What will the value of the Bond S be if the going interest rate is 10%? Round your answer to the nearest cent.
$ 

What will the value of the Bond L be if the going interest rate is 12%? Round your answer to the nearest cent.
$ 

What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cent.
$ 
b. Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change?
I. The change in price due to a change in the required rate of return increases as a bond's maturity decreases.
II. Long-term bonds have greater interest rate risk than do short-term bonds.
III. The change in price due to a change in the required rate of return decreases as a bond's maturity increases.
IV. Long-term bonds have lower interest rate risk than do short-term bonds.
V. Long-term bonds have lower reinvestment rate risk than do short-term bonds.


Interest rate sensitivity
An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as positive numbers.
 Price @ 8% Price @ 5% Percentage Change
 
10-year, 10% annual coupon $ 
$ 
 %

10-year zero $ 
$ 
 %

5-year zero $ 
$ 
 %

30-year zero $ 
$ 
 %

$100 perpetuity $ 
$ 
 %




Yield to call
Six years ago the Templeton Company issued 18-year bonds with a 15% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Templeton called the bonds.
a. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.