BF 620 Ch6 Practice Problems A ten year bond with maturity value of $1000 and yearly coupon of 7.8% has 6 years to maturity. If the investor?s required return falls from 8.1% to 7.7% overnight, what is the change in value of the bond? decrease of $32.14 no change increase of $18.50 increase of $46.17 A company needs $8,000,000 to pursue a project. Assume that it will issue 20 year bonds with maturity value of $1,000, annual coupon is 7.5%, and investors are demanding a return of 7.85% on bonds of similar risk. How many bonds must the company sell to get at least $8,000,000 in proceeds? 8000 8289 8936 9443 An investor purchases a zero-coupon bond with a maturity value of $1000 and 15 years to maturity. The required return is 8.53% annually. If the required return is 9.22% four years from today, what is the change in value of the bond? decrease of $26.56 increase of $2.76 increase of $86.11 increase of $104.66 An investor purchases a 30 year bond with 22 years remaining to maturity. The maturity value of the bond is $1000, the coupon rate is 8.5% annually, and investors require a 9% return. If the investor holds the bond for 15 years, and the required return remains the same, what happens to the value of the bond? There is no change in value since the required rate of return does not change. The value decreases because there is less time remaining to collect interest for the investor. The value decreases because the required rate of return went up. The value increases because the bond is closer to maturity.
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