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Author Question: Flyover Airlines Inc issued 20-year, 8 per annum semi-annual coupon bonds at their face value of ... (Read 99 times)

c0205847

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on: Jul 11, 2018
Flyover Airlines Inc issued 20-year, 8 per annum semi-annual coupon bonds at their face value of 1,000. Immediately after issue a major disaster befell the airline and the yield to maturity on their bonds rose to 15. per annum.
 
  What is the new price of the firm's bonds?
  A) 559.20
  B) 613.22
  C) 1,000
  D) 1324.18

Question 2

The present value of a 100 perpetuity discounted at 5 is 5,000.
 
  Indicate whether the statement is true or false


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popopong

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Reply #1 on: Jul 11, 2018
Answer to Question 1

A
Explanation: A) Via Calculator: N = 202, I = 15/2, PMT = 40, FV = 1,000 Solve for PV = 559.20.

Answer to Question 2

FALSE


c0205847

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Reply #2 on: Jul 11, 2018
Thank you :)


popopong

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Reply #3 on: Jul 11, 2018
Happy to help you


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