Assume Venture Healthcare sold bonds that have ten year maturity, a 12 percent coupon rate with annual payments, and a $1,000 par value. a. suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be the bonds value? b. Suppose that two years after the bonds were issued, the required interest rate rose to 13 percent. What would be bonds value? c. What would be the value of the bonds three years after issue in each scenario above, assuming that interest rate stayed steady at either 7 percent or 13 percent. Minneapolis Health System has bonds outstanding that have four years remaining to maturity, a coupon interest rate of 9 percent paid annually, and a $ 1,000 per value. a. What is the yield to maturity on the issue if the current market price is $ 829? b. If the current market price is $ 1,104? c. Would you be willing to buy one of those bonds for $829 if you required a 12 percent rate of return on the issue? Explain your answer. Six years ago, Bradford Community Hospital issues 20-year municipal bonds with a 7 percent annual coupon rate. The bonds were called today for a $70 call premium- that is, bondholders received $ 1,100. The bond has a call provision that allows Regal to call the bond in four years at a call price of $. 1,060. a. What is the bond’s yield to maturity? b. What is the bond’s yield to call?
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