Kaplan FINANCE 217 - Cyberdyne Systems is issuing a series

1) Cyberdyne Systems is issuing a series of zero coupon bonds to raise? $500M to fund research and development at its Skynet division. Each bond will have a face value of $1 comma 0001,000 and will mature in 2525 years. The yield on the bond is 11?%.

What is the fair price for one of? Cyberdyne's zero coupon? bonds?

The fair price for one of? Cyberdyne's zero coupon bonds is

?$nothing .

  ?(Round to the nearest? cent.)

 

 

 

2) Suppose you purchase a zero coupon bond with a face value of $1 comma 0001,000?, maturing in 1919 years, for $213.95213.95.

Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the? bond's life?

The implicit interest in the first year of the? bond's life is

?$nothing .

?(Round to the nearest? cent.)

 

 

3) What is the percentage change in price for a zero coupon bond if the yield changes from 8.58.5?% to 55?%? The bond has a face value of $1 comma 0001,000 and it matures in 1515 years. Use the price determined from the first? yield, 8.58.5?%, as the base in the percentage calculation.

The percentage change in the bond price if the yield changes from

8.58.5?% to 55?% is nothing ?%.

?(Round to two decimal? places.)

 

 

 

4)Beam Inc. bonds are trading today for a price of

?$846.96846.96.

The bond currently has

1010

years until maturity and has a yield to maturity of

4.984.98?%.

The bond pays annual coupons and the next coupon is due in one year. What is the coupon rate of the? bond?

The coupon rate of the bond is nothing ?%.

? (Round to one decimal? place.)

 

 

5)With celebrity? bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of? 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of

6.56.5?%

and will mature on this day

3434

years from now. The yield on the bond issue is currently

6.356.35?%.

At what price should this bond trade? today, assuming a face value of

?$1 comma 0001,000

and annual? coupons?

The price of the bond today should be $nothing .

?(Round to the nearest? cent.)

 

 

6) What is the price of a 66?-year, 8.4 %8.4% coupon? rate, $ 1 comma 000$1,000 face value bond that pays interest annually if the yield to maturity on similar bonds is 7.1 %7.1%??

The price of the bond is $nothing .

? (Round to the nearest? cent.)