兹维博迪金融学第二版试题库08TB

6. As part of a reorganization plan, a bankruptcy court has permitted a new indenture on an outstanding

bond issue to be put into effect for Leicester Corporation, which recently filed for bankruptcy. It is known that the issue has $1,000 par value per bond, 15 years to maturity, and a coupon rate of 11 percent paid annually. The reorganization plan allows the following arrangement: In years 1 through 7, there will be no coupon paid (that is, coupon = $0). In years 8 through 15, regular coupon

payments will resume. At maturity in year 15, the par value plus the sum of all coupon payments that were not paid during years 1 through 7 must be paid. However, no interest will be paid on the

deferred coupon payments. If the required rate of return is 18 percent, calculate the current price the Leicester bonds would sell for in the market.

Answer: Coupon = 0.11 x 1000 = $110 per year

Set up a table of cash flow obligations over the next 15 years. Year Cash Flow 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 110 9 110 10 110 11 110 12 110 13 110 14 110 15 110 + $1000 (par) + $770 (deferred coupons) = $1,880

The present value of this cash flow stream, using a discount rate of 18%, is $288.62 per bond.

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7. The Dharma Corporation has recently experienced a market reevaluation. Currently, the firm has a

bond issue outstanding with 18 years to maturity, a face value of $1,000, and a coupon rate of 10 percent paid annually. The required rate of return on this debt issue has risen to 16 percent. Calculate the current price of this bond.

Answer:

n i = YTM PV FV PMT Result 18 16 ? 1,000 100 PV = $650.92

8. Calculate the coupon rate, current yield, and the yield to maturity for a bond that has $1,000 par value,

pays $95 interest annually, matures in 25 years, and has a current price of $1,087.75.

Answer: Coupon rate = 95/1,000 = 9.5% per year

Current yield = coupon/price = 95/1,087.75

= 8.73% To calculate yield to maturity:

n i = YTM PV FV PMT Result 25 ? –1,087.75 1,000 95 YTM = 8.63%

9. As of today, January 1, 2009, Gala Worldwide is holding $1,000,000 in long-term debt at par bonds.

The bonds have a par value of $1,000, mature on January 1, 2029, and pay a 7 percent coupon. Calculate the current market value of Flanders’ debt, if the yield to maturity is 8 percent.

Answer: Total number of bonds = $100,000,000/$1,000 = 100,000 bonds

n i PV FV PMT Result 20 8 ? 1,000 70 PV = $901.85

The current market value = $901.85 x 100,000 = $90,185,000

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