Imex Global Solutions Issued A Bond On December 31 2015 To The Public Which Pays

IMEX Global Solutions issued a bond on December 31, 2015 to the public which pays $80 once per year in interest and a $1,000 principal repayment after year 10, and is priced in the open market to reflect a required return of 11.5% to bondholders, or $798. The company’s management has the option of redeeming this bond early for $1,050 plus any accrued interest.

As it relates to the IMEX bonds, identify the following:

Face value

Market value                    

Coupon rate

Yield to maturity             

Current yield                    

Call premium                    

Maturity                           

Identify the following general statements concerning bonds as True or False:

Bonds provide tax benefits to issuers of bonds.  

The risk of company insolvency increases when a firm issues bonds.

Municipal bonds pay interest that is federally and state tax-free.           

All else constant, a bond will sell at a discount when its coupon rate is less than its yield to maturity.                                                                                       

Decreasing the time to maturity increases the price of a discount bond, all else unchanged.                                                                                   

SHOW YOUR CALCULATIONS FOR #13-#20.

You have the option of performing calculations manually or with the use a financial calculator or spreadsheet. Either way, you must specify what is being calculated to earn credit:

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