finance hw

What must the coupon rate be on
the bonds? (

Round your answer to

2 decimal places. (e.g., 32.16))

Coupon

rate

%  

  YTM

3. Ponzi
Corporation has bonds on the market with 19.5 years to maturity, a YTM of 8.00 percent, and a current price of $1,069. The
bonds make semiannual payments.

What
must the coupon rate be on these bonds? (Round
your answer

 to
2 decimal places. (e.g., 32.16))

Both Bond Sam and Bond Dave have 9
percent coupons, make semiannual payments,

and are priced at par value. Bond Sam
has four years to maturity,

whereas Bond Dave has 15 years to
maturity.

If interest rates suddenly rise by
2 percent, what is the percentage

change in the price of Bond Sam and Bond
Dave? (Negative amounts

should be indicated by a
minus sign. Round your answers to

2 decimal places. (e.g., 32.16))

  Percentage
change in price of Bond Sam

%  

  Percentage
change in price of Bond Dave

If rates were to suddenly fall by
2 percent instead, what would be the percentage

 change in the
price of Bond Sam and Bond Dave? (Round your

answers to 2 decimal
places. (e.g., 32.16))

Coccia Co. wants to issue new 20-year
bonds for some much-needed

expansion projects. The company currently
has 6 percent coupon

bonds on the market that sell for
$1,055, make semiannual payments,

and mature in 20 years.

What coupon rate should the
company set on its new bonds if

it wants them to sell at par? (Round your answer to 2 decimal places. (e.g., 32.16))

Backwater Corp. has 8 percent
coupon bonds making annual

payments with a YTM of 7.6 percent. The
current yield on these bonds is 7.95 percent.

How many years do these bonds have
left until they mature? (Do

 not round
intermediate calculations and round your final

answer to 2 decimal
places. (e.g., 32.16))

Maturity

of bond

years  

Suppose the following bond quotes
for IOU Corporation appear

in the financial page of todayÕs
newspaper. Assume the bond has a

 face value of
$1,000 and the current date is April 19, 2012.

Company (Ticker)

Last Price

Last Yield

EST Vol (000s)

  IOU
(IOU)

6.8

Apr 19,
2028

104.16

??

1,840

What is the yield to maturity of
the bond? (Round your answer

to 2 decimal places. (e.g., 32.16))

What is the current yield? (Round your answer to 2 decimal places. (e.g., 32.16))

  Current
yield

Straight-line method

11.

Suppose
your company needs to raise $49 million and you want to issue
25-year bonds for this purpose. Assume the required return on
your bond issue will be 7 percent, and youÕre evaluating two
issue alternatives: A 7 percent semiannual coupon bond and a
zero coupon bond. Your companyÕs tax rate is 30 percent.

a-1.

How many of the coupon bonds would you need
to issue to raise the $49 million?

  Number of coupon bonds

a-2.

How many of the zeroes would you need to
issue? (Round your answer to 2
decimal places. (e.g., 32.16))

  Number of zero coupon bonds

b-1.

In 25
years, what will your companyÕs repayment be
if you issue the coupon bonds? (Enter
your answer in dollars, not millions of dollars, i.e.
1,234,567.)

  Coupon bonds

repayment

b-2.

What if
you issue the zeroes? (Enter
your answer in dollars, not millions of dollars, i.e.
1,234,567.)

  Zeroes repayment

Calculate the aftertax
cash flows for the first year for each bond. (Enter your answer in dollars, not
millions of dollars, i.e. 1,234,567.)

  (Click to select)OutflowInflow

  Zero coupon bonds

  (Click to select)InflowOutflow