Related questions with answers

Following is a price quote for $200 million of 6.55% coupon bonds issued by Deere & Company that mature in October 2028:

Ratings/Industry	lssue/Call Information	Coupon/Maturity	Price/VTM	Cisco Systems, Inc. 2017
A2/A	Deere & Company	6.55	123.962	$35,705
Industrial	Non Callable, NYBE, DE	10-01-2028	4.178	691

This quote indicates that, on this day, Deere's bonds have a market price of 123.962 ( 123.962% of face value). resulting in a yield of 4.178%.

Assuming that the bonds remain outstanding until their maturity, at what market price will the bonds sell on their due date of October 1, 2028?

Following is a price quote for $200 million of 6.55% coupon bonds issued by Deere & Company that mature in October 2028:

Ratings/Industry	lssue/Call Information	Coupon/Maturity	Price/VTM	Cisco Systems, Inc. 2017
A2/A	Deere & Company	6.55	123.962	$35,705
Industrial	Non Callable, NYBE, DE	10-01-2028	4.178	691

This quote indicates that, on this day, Deere's bonds have a market price of 123.962 ( 123.962% of face value). resulting in a yield of 4.178%.

If Deere were to repurchase its bonds at the above market price of 123.962, how would the repurchase affect its current income'? Assume that the bonds were issued at face value (100).

Following is a price quote for $200 million of 6.55% coupon bonds issued by Deere & Company that mature in October 2028:

Ratings/Industry	lssue/Call Information	Coupon/Maturity	Price/VTM	Cisco Systems, Inc. 2017
A2/A	Deere & Company	6.55	123.962	$35,705
Industrial	Non Callable, NYBE, DE	10-01-2028	4.178	691

This quote indicates that, on this day, Deere's bonds have a market price of 123.962 ( 123.962% of face value). resulting in a yield of 4.178%.

Does the change in interest rates since the issuance of these bonds affect the amount of interest expense that Deere is reporting in its income statement? Explain.