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  3. the following information applies to the next 4 qu

The following information applies to the next 4 questions. A major chemical manufacturer has experienced a market reevaluation...

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Finance

  1. The following information applies to the next 4questions.

A major chemical manufacturer has experienced a marketreevaluation lately due to a number of lawsuits.  Thefirm has a bond issue outstanding with 20 years to maturity and acoupon rate of 7% (paid annually).  The required rate hasnow risen to 10%. The par value of the bond is $1,000.


  1. What is the current value of these securities?

727.88

744.59

794.28

818.10

881.68

  1. What is the current yield of this bond?

8.12%

8.22%

8.35%

8.55%

9.40%

What would be the selling price of the same 7% coupon bond oneyear later, if the market interest rate remains at 10%?

735.23

749.05

805.67

823.56

898.42

If the 7% coupon bond with time to maturity of 20 years isselling for $901.82, what is the yield to maturity of the bond?

6.5%

8.0%

9.0%

9.5%

10.0%

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