Questions from Corporate Finance

Q: Is the yield to maturity on a bond the same thing as

Is the yield to maturity on a bond the same thing as the required return? Is YTM the same thing as the coupon rate? Suppose today a 10 percent coupon bond sells at par. Two years from now, the require...

Q: Suppose you buy a 7 percent coupon, 20-year bond

Suppose you buy a 7 percent coupon, 20-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, what happens to the value of your bond? Why?

Q: Staind, Inc., has 7.5 percent coupon bonds on

Staind, Inc., has 7.5 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75 percent, what is the current bond price?...

Q: Jetson Spacecraft Corp. shows the following information on its 2009 income

Jetson Spacecraft Corp. shows the following information on its 2009 income statement: sales=$196,000; costs $104,000; other expenses=$6,800; depreciation expense=$9,100; interest expense=$14,800; taxe...

Q: Ackerman Co. has 9 percent coupon bonds on the market with

Ackerman Co. has 9 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments. If the bond currently sells for $934, what is its YTM?

Q: Kiss the Sky Enterprises has bonds on the market making annual payments

Kiss the Sky Enterprises has bonds on the market making annual payments, with 13 years to maturity, and selling for $1,045. At this price, the bonds yield 7.5 percent. What must the coupon rate be on...

Q: Grohl Co. issued 11-year bonds a year ago at

Grohl Co. issued 11-year bonds a year ago at a coupon rate of 6.9 percent. The bonds make semiannual payments. If the YTM on these bonds is 7.4 percent, what is the current bond price?

Q: Ngata Corp. issued 12-year bonds 2 years ago at

Ngata Corp. issued 12-year bonds 2 years ago at a coupon rate of 8.4 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?

Q: Ashes Divide Corporation has bonds on the market with 14.5

Ashes Divide Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.8 percent, and a current price of $924. The bonds make semiannual payments. What must the coupon rate be on the...

Q: An investment offers a 14 percent total return over the coming year

An investment offers a 14 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 9 percent. What does Bill believe the inflation rate wil...