1. Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

1. Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 11%. The bonds have a yield to maturity of 12%. What is the current market price of these bonds? Round your answer to the nearest cent.

2. Wilson Wonders' bonds have 15 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 12%. The bonds sell at a price of $1,100. What is their yield to maturity? Round your answer to two decimal places.

Expert Solution

Solution to QUESTION-1

Current Market 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 11%]	PMT	110
Market Interest Rate or Required Rate of Return [12%]	1/Y	12
Time to Maturity [5 Years]	N	5
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 = $963.95.

“Hence, the Current Market Price of the Bond will be $963.95”

Solution to QUESTION-2

Yield to Maturity [YTM] of the Bond

The Yield to maturity of (YTM) of the Bond is calculated using financial calculator as follows (Normally, the YTM is calculated either using EXCEL Functions or by using Financial Calculator)


Variables	Financial Calculator Keys	Figure

Face Value [$1,000]	FV	1,000
Coupon Amount [$1,000 x 12%]	PMT	120
Market Interest Rate or Required Rate of Return	1/Y	?
Time to Maturity [15 Years]	N	15
Bond Price [-$1,100]	PV	-1,100

We need to set the above figures into the financial calculator to find out the Yield to Maturity of the Bond. After entering the above keys in the financial calculator, we get the yield to maturity (YTM) on the bond = 10.64%.

“Therefore, the Yield to Maturity [YTM] of the Bond will be 10.64%”

jeff jeffy answered 8 months ago

Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have...

Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10.5%. The bonds have a yield to maturity of 11%. What is the current market price of these bonds? Round your answer to the nearest cent.

1, Jackson Corporation's bonds have 15 years remaining to maturity. Interest is paid annually, the bonds...

1, Jackson Corporation's bonds have 15 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 8%. What is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent. 2, bonds will mature in 12 years. The bonds have a face value of $1,000 and an 11.5% coupon rate, paid semiannually. The...

1. Jackson Corporation's bonds have 9 years remaining to maturity. Interest is paid annually, the bonds...

1. Jackson Corporation's bonds have 9 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. The bonds have a yield to maturity of 10%. What is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent. 2. Wilson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and...

The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. What is the yield to maturity at a current market price of $828? Round your answer to two decimal places. % What is the yield to maturity at a current market price of $1,100? Round your answer to two decimal places. % Would you pay $828 for one of these bonds if...

The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporation's bonds have 4 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $880? Round your answer to two decimal places. % What is the yield to maturity at a current market price of $1,129? Round your answer to two decimal places. %

1. ABC Company bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

1. ABC Company bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value and the coupon interest rate is 9%. i) What is the yield to maturity at a current market price of $829? ii) What is the yield to maturity at a current market price of $1,104? iii) If you thought that the appropriate rate of interest was 12% (i.e. Kd=12%), would you buy these bonds? (Both, if one, identify which...

The Brownstone Corporations bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...

The Brownstone Corporations bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9%. a) What is the yield to maturity at a current market price of $849? $ b) What is the yield to maturity at a current market price of $1,146? $ c) Would you pay $849 for one of these bonds if you thought that the appropriate rate of YTM was 12%? Explain.

Bond Valuation with Annual Payments Jackson Corporation's bonds have 5 years remaining to maturity. Interest is...

Bond Valuation with Annual Payments Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 11%. The bonds have a yield to maturity of 10%. What is the current market price of these bonds? Round your answer to the nearest cent. Yield to Maturity for Annual Payments Wilson Wonders' bonds have 15 years remaining to maturity. Interest is paid annually, the bonds have a...

Question 3 Danielle Motors’ bonds have 5 years remaining to maturity. Interest is paid annually, the...

Question 3 Danielle Motors’ bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. Required What is the current market price of these bonds? Compute the current yield Compute the duration of the bond Compute the modified duration and interpret your results

1. Madsen Motors's bonds have 25 years remaining to maturity. Interest is paid annually; they have...

1. Madsen Motors's bonds have 25 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 7.5%; and the yield to maturity is 10%. What is the bond's current market price? Round your answer to the nearest cent. 2. Nesmith Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 16 years to maturity, and a 9.5% YTM. What is the bond's price? Round your answer to the nearest...

Question