Bond valuation relationships Arizona Public Utilities issued a bond that pays $ in interest, with a $ par value. It matures in years. The market's required yield to maturity on a comparablerisk bond is percent.
a Calculate the value of the bond.
b How does the value change if the market's required yield to maturity on a comparablerisk bond i increases to percent or ii decreases to percent?
c Explain the implications of your answers in part as they relate to interestrate risk, premium bonds, and discount bonds.
d Assume that the bond matures in years instead of years. Recompute your answers in parts a and
e Explain the implications of your answers in part as they relate to interestrate risk, premium bonds, and discount bonds.
a What is the value of the bond if the market's required yield to maturity on a comparablerisk bond is percent?
$Round to the nearest cent.
bi What is the value of the bond if the market's required yield to maturity on a comparablerisk bond increases to percent?
$ Round to the nearest cent.
