What is the current value of a $1,000 bond with a 7% annual coupon rate (paid...

What is the current value of a $1,000 bond with a 7% annual coupon rate (paid semi-annually) that matures in 7 years if the appropriate discount rate is 11%

Solutions

Expert Solution

Current Value of the Bond

The Current Value 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 7.00% x ½]	PMT	35
Market Interest Rate or Required Rate of Return [11.00% x ½]	1/Y	5.50
Time to Maturity [7 Years x 2]	N	14
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 = $808.21.

“Hence, the Current Value of the Bond will be $808.21“

ekkarill92 answered 1 week ago

Next > < Previous

Related Solutions

A bond with face Value =$1,000 with semi-annual payments, a coupon rate of 7%, and has...

A bond with face Value =$1,000 with semi-annual payments, a coupon rate of 7%, and has 8 years to maturity. The market requires a yield of 8% on bonds of this risk. What is this bond’s price?

A $1,000 par-value bond with 5 years of maturity pays a 7% coupon rate, paid annually. What is the value of the bond if your required rate of return is 7%?

A $1,000 par-value bond with 5 years of maturity pays a 7% coupon rate, paid annually. What is the value of the bond if your required rate of return is 7%?A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid semi-annually. What is the value of the bond if your required rate of return is 8%?

Finance: 1. What is the current value of a $1,000 bond with a 6% annual coupon...

Finance: 1. What is the current value of a $1,000 bond with a 6% annual coupon rate (paid annually) that matures in 11 years if the appropriate discount rate is 12%. Please round your answer to the nearest hundredth. 2. What is the current value of a $1,000 bond with a 5% annual coupon rate (paid semi-annually) that matures in 6 years if the appropriate stated annual discount rate is 8%. Please round your answer to the nearest hundredth. 3....

Consider an annual-pay bond with a $1,000 par value and a 7 percent coupon rate, three...

Consider an annual-pay bond with a $1,000 par value and a 7 percent coupon rate, three years remaining to maturity, and a 9 percent yield to maturity. The duration of this bond is closest to: Group of answer choices 2.8 years 2.63 years 2.5 years

what is the coupon rate for a $2,000 face value bond with annual coupon payments, current...

what is the coupon rate for a $2,000 face value bond with annual coupon payments, current price of $3,000, yield to maturity of 5.15%, and 12 years to maturity?

1. What is the price of a $1,000 par value bond with an 8% coupon rate paid...

1. What is the price of a $1,000 par value bond with an 8% coupon rate paid annually, if the bond is priced to yield 8% and has 9 years to maturity? 2. What would be the price of the bond in #1 if the yield decreased to 6%? 3. What would be the price of the bond in #1 if the yield rose to 10% and was callable at 110% of par in 4 years? 4. What is the yield...

A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon paid...

A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon paid in arrears annually) has yield-to-maturity 4.5%. What is the convexity of the bond?

Last year Janet purchased a $1,000 face value corporate bond with an 7% annual coupon rate...

Last year Janet purchased a $1,000 face value corporate bond with an 7% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 9.33%. If Janet sold the bond today for $1,091.83, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate...

Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 7.04%. If Janet sold the bond today for $1,004.41, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

Last year Janet purchased a $1,000 face value corporate bond with an 7% annual coupon rate...

Last year Janet purchased a $1,000 face value corporate bond with an 7% annual coupon rate and a 25-year maturity. At the time of the purchase, it had an expected yield to maturity of 13.17%. If Janet sold the bond today for $1,170.06, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

Subjects