A major chemical manufacturer has experienced a market reevaluation lately due to a number of lawsuits. The firm has a bond issue outstanding with 20 years to maturity and a coupon rate of 7% (paid annually). The required rate has now risen to 10%. The par value of the bond is $1,000.
A. What is the current value of these securities?
727.88
744.59
794.28
818.10
881.68
B. What is the current yield of this bond?
8.12%
8.22%
8.35%
8.55%
9.40%
C. What would be the selling price of the same 7% coupon bond one year later, if the market interest rate remains at 10%?
735.23
749.05
805.67
823.56
898.42
D. If the 7% coupon bond with time to maturity of 20 years is selling for $901.82, what is the yield to maturity of the bond?
6.5%
8.0%
9.0%
9.5%
10.0%