Question
In: Finance
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The...
| A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. | |||||
| The required rate of return (yield to maturity)on the bond is 8.5%. | |||||
| Compute the price of the bond today using the appropriate Excel formula | |||||
| Compute the price of the same bond if it has 10 years remaining to maturity instead of 11. | |||||
| What is the capital gains yield on the bond? | |||||
| What is the current yield on the bond? | |||||
| What is the total yield on the bond? | |||||
| What will the bond's price be at the instant before it matures? | |||||
| SHOW WORK HERE, HIGHLIGHT FINAL ANSWERS IN YELLOW | |||||
| 11 years | 10 years | ||||
| PV | |||||
| RATE | |||||
| NPER | |||||
| PMT | |||||
| FV | |||||
Solutions
Expert Solution
As per rules I am answering the first 4 subparts of the question
| 11 years | 10 years | |
| PV | $825.78 | $835.97 |
| RATE | 8.50% | 8.50% |
| NPER | 11 | 10 |
| PMT | 60 | 60 |
| FV | 1000 | 1000 |
| Q No | ||
| 1 | Compute the price of the bond today using the appropriate Excel formula | $825.78 |
| 2 | Compute the price of the same bond if it has 10 years remaining to maturity instead of 11. | $835.97 |
| 3 | What is the capital gains yield on the bond? | 1.23% |
| 4 | What is the current yield on the bond? | 7.27% |
WORKINGS
jeff jeffy answered 1 year agoRelated Solutions
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