Question
In: Finance
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 25 years to maturity, and a coupon rate of 7.1 percent paid annually. If the yield to maturity is 8.2 percent, what is the current price of the bond?
Solutions
Expert Solution
Current price of the Bond
The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the Face Value/Par Value. The Price of the Bond is normally calculated either by using EXCEL Functions or by using Financial Calculator.
Here, the calculation of the Bond Price using financial calculator is as follows
|
Variables |
Financial Calculator Keys |
Figures |
|
Face Value [-€1,000] |
FV |
-1,000 |
|
Coupon Amount [€1,000 x 7.10% x ½] |
PMT |
35.50 |
|
Market Interest Rate or Required Rate of Return [8.20% x ½] |
1/Y |
4.10 |
|
Time to Maturity [25 Years x 2] |
N |
50 |
|
Bond Price |
PV |
? |
Here, we need to set the above key variables into the financial calculator to find out the Price of the Bond. After entering the above keys in the financial calculator, we get the Price of the Bond = €883.84.
“Therefore, the Current Price of the Bond will be €883.84”
jeff jeffy answered 8 months agoRelated Solutions
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 14 years to maturity, and a coupon rate of 8
percent paid annuallly. If the yield to maturity is 11 percent,
what is the current price of the bond?
Multiple Choice
€830.07
€1,030.00
$751.02
€1,251.33
€790.54
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 20 years to maturity, and a coupon rate of
6.2 percent paid annually. If the yield to maturity is 7.3 percent,
what is the current price of the bond? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
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a par value of €1,000, 9 years to maturity, and a coupon rate of 6
percent paid annually. If the yield to maturity is 10 percent, what
is the current price of the bond?
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 15 years to maturity, and a coupon rate of
6.1 percent paid annually. If the yield to maturity is 7.2 percent,
what is the current price of the bond? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 6 years to maturity, and a coupon rate of 6
percent paid annuallly. If the yield to maturity is 10 percent,
what is the current price of the bond?
rev: 02_28_2019_QC_CS-161195
Multiple Choice
$784.50
€1,200.69
€867.08
€825.79
€1,030.00
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of? 1000, 25 years to maturity, and a coupon rate of
6.4 percent paid annually. If the yield to maturity is 7.5 percent,
what is the current price of the bond?
If the yield to maturity is 8.2 percent, what is the current
price of the bond? (Do...
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 10 years to maturity, and a coupon rate of
6.8 percent paid annually.
If the yield to maturity is 7.9 percent, what is the current
price of the bond? (Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,
32.16.)
A Japanese...
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...
Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 25 years to maturity, and a coupon rate of
7.1 percent paid annually.
If the yield to maturity is 8.2 percent, what is the current
price of the bond? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
1. Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued...
1. Even though most corporate bonds in the United States make
coupon payments semiannually, bonds issued elsewhere often have
annual coupon payments. Suppose a German company issues a bond with
a par value of €1,000, 9 years to maturity, and a coupon rate of 8
percent paid annuallly. If the yield to maturity is 10 percent,
what is the current price of the bond?
€1,030.00
€1,128.94
$840.58
€929.06
€884.82
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