You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores....

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Finance

You are called in as a financial analyst to appraise the bondsof Olsen’s Clothing Stores. The $1,000 par value bonds have aquoted annual interest rate of 12 percent, which is paidsemiannually. The yield to maturity on the bonds is 14 percentannual interest. There are 20 years to maturity. Use Appendix B andAppendix D for an approximate answer but calculate your finalanswer using the formula and financial calculator methods. a.Compute the price of the bonds based on semiannual analysis. b.With 15 years to maturity, if yield to maturity goes downsubstantially to 10 percent, what will be the new price of thebonds?

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aThe price of the bond with 20 years to maturity The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the Bond 1000 Semiannual Coupon Amount 60 1000 x 12 x Semiannual Yield to Maturity 7 14 x See Answer

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You are called in as a financial analyst to appraise the bondsof Olsen’s Clothing Stores. The $1,000 par value bonds have aquoted annual interest rate of 12 percent, which is paidsemiannually. The yield to maturity on the bonds is 14 percentannual interest. There are 20 years to maturity. Use Appendix B andAppendix D for an approximate answer but calculate your finalanswer using the formula and financial calculator methods. a.Compute the price of the bonds based on semiannual analysis. b.With 15 years to maturity, if yield to maturity goes downsubstantially to 10 percent, what will be the new price of thebonds?