Cases of Bond Valuation
1. Organ, Inc., has 7.5 percent coupon bonds on the market that have 10 years left to maturity.
The bonds make annual payments and has par value of $1,000 each. If the YTM on these
bonds is 8.75 percent, what is the current bond price? And what’s the meaning your result?.
2. Microchirp Corp. has issued a bond which carries an 8 percent coupon and paid
semiannually. The face value of its bond is $1,000, and the bond mature in 12 years. If the
bond is priced to yield 7% so,
a. What is the price of Microchirp Corp’s bond?
b. What would be the price of the bond if the yield rose to 9%?
c. What is the current yield on the bond if the YTM is 8%?
d. Explain the meaning your result?
3. PT Bayarmarga, a toll road service company, issued 15-year bonds two year ago at a
coupon rate of 7 percent. The bonds make semiannual payments. If the yield to maturity
on these bonds is 8 percent, what is the current bond price? Note that the par value of these
bonds are $1,000.. What’s the meaning?