In: Finance
On the next seven questions, express monetary answers to the
nearest whole dollar and percentages to the
nearest hundredth.
15. The price of a zero-coupon bond with an eight year maturity
is $3,852.75. The face value of the bond is
$5,000. What is the yield on the bond? (Assume semi-annual
compounding) (Express the percentage to the
nearest hundredth)
16. Calculate the price of a 7.48% coupon bond with 12 years left
to maturity and a market interest rate of 8.74%.
Assume interest rates are semiannual and par value is $1,000.
(Express the monetary value to the nearest
whole dollar.)
17. A 6.75 percent coupon bond with 12 years left to maturity can
be called in 4 years. The call premium is one
year of coupon payments. It is offered for sale at $1,062.75.
Assume that interest payments are paid semiannually
and par value is $1,000. What is the yield to call of the bond?
(Express the percentage to the
nearest hundredth)
15
K = Nx2 |
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2 |
k=1 |
K =8x2 |
3852.75 =∑ [(0*5000/200)/(1 + YTM/200)^k] + 5000/(1 + YTM/200)^8x2 |
k=1 |
YTM% = 3.28 |
16
K = Nx2 |
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2 |
k=1 |
K =12x2 |
Bond Price =∑ [(7.48*1000/200)/(1 + 8.74/200)^k] + 1000/(1 + 8.74/200)^12x2 |
k=1 |
Bond Price = 907.48 |
Please ask remaining parts seperately, questions are unrelated, I have done one bonus