Posted by **Mary** on Monday, November 7, 2011 at 9:50pm.

Bond value and time--Constant required returns Pecos Manufacturing has just issued a 15-year, 12% coupon interest rate, $1,000-par bond that pays interest annually. The required return is currently 14%, and the company is certain it will remain at 14% until the bond matures in 15 years. a. Assuming that the required return does remain at 14% until maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, and (6) 1 year to maturity. b. Plot your findings on a set of "time to maturity (x axis)market value of bond (y axis)" axes constructed similarly to Figure 6.5 on page 246. c. All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity? Explain in light of the graph in part b.

Any clue how to start?

## Answer This Question

## Related Questions

- finance - (Bond valuation) Eagle Ventures has a bond issue outstanding with an ...
- finance - You buy an 8% annual coupon bond from CARRIS Inc. that has a 25 year ...
- finance - 10 year bond of par value Rs.8,000 was issued, with annual coupon rate...
- finance - 1. Yest Corporation's bonds have a 15-year maturity, a 7% semiannual ...
- Finance - A 12-year bond has an annual coupon rate of 9%. The coupon rate will ...
- finance - Assume a $1,000 face value bond has a coupon rate of 8.5 percent, pays...
- Finance - The Carter Company's bond mature in 10 years have a par value of 1,000...
- Finance - Heinz Corporation bonds carry a coupon of 8% and will mature in 5 ...
- Finance - Heinz Corporation bonds carry a coupon of 8% and will mature in 5 ...
- Finance - A CBS bond with a par value of $1,000, an interest rate of 7.625 ...

More Related Questions