C Chegg Aplia: Student Question x Bb Course Content FINC5 X 4 Questions!!! A. (i
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C Chegg Aplia: Student Question x Bb Course Content FINC5 X 4 Questions!!! A. (increase X /af/servlet/quiz?quiz action takeQuiz&quiz; probGuid QNAPCOA80101000000312532300d0000&ctx; kli2-0007&ck; 2 146941537 Courses aplia com Kassandra Morales I Customer Support I Sign O FINC5150 Summer 2016 aplia Grades ized Revi Discussion Bonds (Debt)-Characteristics and Valuation Graded Assignment I Read Chapter 6 l Back to Assignment Due Sunday 07.24.16 at 11:45 PM Average: Attempts: 10. Th bond Aa Booker Petroleum Refiners (BPR) has an issue of 10-year, 6% annual coupon bonds outstanding. The bonds, which were originally issued 20 years ago, have a face value (FV)of $1,000 a yield-to-maturity (YTM) of 6%. and are noncallable. What is the current market price of BPR's bonds? $850.00 O $1,100.00 O $1,000.00 O $1,250.00 Are the bonds of Booker Petroleum Refiners selling at a discount, at par, or at a premium? O Premium O Par O Discount What is the current yield on Booker Petroleum Refiners's outstanding bonds? 5.45% O 7.06% O 4.80% O 6.00% What is the expected one-year capital gain yield on the bonds of Booker Petroleum Refiners? O 6.00% O 0.00 O 12.00% O 9.00 S9:31 ick to add notes Th24/2016 COMMENTS DE 27 OF 4 NOTESExplanation / Answer
Answer 1.
Annual Coupon = 60
YTM = 6%
FV = 1,000
N = 10 years
Market Price = 60*PVIFA(6%, 10) + 1,000*PVIF(6%, 10)
Market Price = $1,000.
Answer 2.
The bonds are selling at par.
Answer 3.
Current Yield = Annual Coupon / Current Price
Current Yield = 60/1,000
Current Yield = 6.00%
Answer 4.
P0 = $1,000
P1 = 60*PVIFA(6%, 9) + 1,000*PVIF(6%, 9)
P1 = $1,000
Capital gain Yield = (P1 – P0) / P0
Capital gain Yield = 0%
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