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Author Question: Simpson Industries Inc. bonds currently have 12 years remaining to maturity. What is the current ... (Read 71 times)

craiczarry

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  • Posts: 527
on: Jul 11, 2018
Simpson Industries Inc. bonds currently have 12 years remaining to maturity. What is the current price of the firm's semi-annual bonds if they carry a face value of 1,000, an annual coupon rate of 8 and an annual yield to maturity of 7?
 
  A) 924.64
  B) 1,000.00
  C) 1,079.43
  D) 1,080.29

Question 2

A share of preferred stock that pays the same annual dividend forever is an example of a
  perpetuity.
 
  Indicate whether the statement is true or false


bitingbit

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

D
Explanation: D) Via Calculator: N = 122, I = 7/2, PMT = 40, FV = 1,000 Solve for PV = 1,080.29.

Answer to Question 2

TRUE


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