Question
In: Finance
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual...
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.
Assume that a $1,000,000 par value, semiannual coupon US Treasury note with four years to maturity has a coupon rate of 4%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
a) $1,049,602.92
b) $874,669.10
c) $551,041.53
d) $743,468.74
Based on your calculations and understanding of semiannual coupon bonds, complete the following statement:
When valuing a semiannual coupon bond, the time period variable(N) used to calculate the price of a bond reflects the number of periods remaining in the bond’s life.
Solutions
jeff jeffy answered 6 months agoRelated Solutions
Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual...
Bonds often pay a coupon twice a year. For the valuation of
bonds that make semiannual payments, the number of periods doubles,
whereas the amount of cash flow decreases by half. Using the values
of cash flows and number of periods, the valuation model is
adjusted accordingly.
Assume that a $1,000,000 par value, semiannual coupon U.S.
Treasury note with two years to maturity has a coupon rate of 3%.
The yield to maturity (YTM) of the bond is 11.00%. Using...
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1) Semiannual compounding and/or that all coupon bonds are
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****Please show the steps of calculation and the
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The Ivanhoe Department of Transportation has issued 25-year
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If these bonds are currently selling at $918.89. What is the
effective annual yield? (Round answer to 1 decimal place, e.g.
15.2%.)
Effective annual yield: I got 8.2% but it is wrong
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Oriole, Inc., has four-year bonds outstanding that pay a coupon
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What is the yield to maturity that an investor can expect to
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Yield to maturity
%
What is the effective annual yield? (Round answer to 1
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Effective annual yield
%
Click if you would like to Show...
Marshall Company is issuing eight-year bonds with a coupon rate of 6.14 percent and semiannual coupon...
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Bond price $ ?
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nearest cent. $ ______________
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