Question1: Ciza Inc. raised 100 million dollar by floating corporate bonds. Each bond paid a coupon of 7% with a Par Value of 1000.00 dollar and will mature in four years.
Required
[A] Holding everything constant and assuming that the coupon is paid on a semiannual basis, determine the intrinsic value of the bond to you? Discuss your answer
[B] Now suppose yearly coupon payments but 20 years remaining to maturity, determine the value of the bond? Explain your answer.
[C] Calculate the current market value of the bond if your required rate of return is 14%.
[D] Calculate the bond’s current yield? Explain your answer.
Question2: Zota In, has a bond issue outstanding with eight years remaining to maturity, a coupon rate of 10% with interest paid yearly, and a Par Value of 1000 dollar.
Required
If the current market price of the bond is $814.45, calculate the bond’s yield to maturity? Express your answer.
Question3: Hilo Inc. of Chandler, Arizona has floated some zero coupon bonds to finance its capital expenditures. The Par Value of each bond is $1000.
Required
[A] Assuming a market price of $300 with a maturity of 30 years, determine and discuss the bond’s yield-to-maturity.
[B] Suppose a holding period of 10 years and a yield-to-maturity of 10%, determine and discuss the bond’s current market price.
[C] Suppose a market price of $300 and a yield of maturity of 8%, estimate and discuss the holding period.