bond valuation assume the following information for an existing bong that provides annual coupon payments: par...

bond valuation assume the following information for an existing bong that provides annual coupon payments: par value= $1,000 coupon rate= 11% maturity= 4 years required rate of return by investors= 11% a). what is the present value of the bond? b). if the required rate of return by investors were 14 percent instead of 11 percent, what would be the present value of the bond? c). if the required rate of return by investors were 9 percent, what would be the present value of the bond?

Expert Solution

a)

Present value of bond = $1,000

b)

Hence, present value of bond is $912.59

c)

Hence, present value of bond is $1,064.79

*Please rate Thumbs up

jeff jeffy answered 1 week ago

Bond prices. Price the bonds from the following table with annual coupon payments. Par Value Coupon...

Bond prices. Price the bonds from the following table with annual coupon payments. Par Value Coupon Rate Years to Maturity Yield to Maturity Price $1,000.00 6% 25 10% ? $1,000.00 8% 30 12% ? $5,000.00 12% 15 11% ? $1,000.00 7% 5 6% ? a. Find the price for the bond in the following table: (Round to the nearest cent.) Par Value Coupon Rate Years to Maturity Yield to Maturity Price $1,000.00 6% 25 10% $_______ b. Find the price...

A 10-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon...

A 10-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places.) Bond prices: 950, 1000, 1050 What are the Bond Equivalent Annual Yield to Maturity and Effective Annual Yield to Maturity

A $1,000 bond with annual coupon payments at 9% of par has an expected return of...

A $1,000 bond with annual coupon payments at 9% of par has an expected return of 11% over the life of the bond, compute the value of the bond at these times to maturity 12, 8, 5, 2 years ( and how do i enter this information into an online bond yield to maturity calculator)

Find the duration of a 3-year bond with annual coupon payments of $80 and a par...

Find the duration of a 3-year bond with annual coupon payments of $80 and a par value of $1,000. The current market price of the bond is $950.25. If the YTM of the bond dropped by 1%, what would happen to the bond price? NOTE: please help especially on the duration part

Assume the following characteristics for a particular bond: A face value of $1,000; annual coupon payments...

Assume the following characteristics for a particular bond: A face value of $1,000; annual coupon payments of $60 (the first payment due in 1 year); an internal yieldto-maturity of 7% (compounded annually); and a three year term. (a) Compute the Macaulay duration of the bond. (b) Given your answer above, compute the approximate change in the bond’s value if the yield fell to 6.5%. (c) Now compute the actually change in the bond’s value. Comment on the difference.

A 10-year, 10% coupon bond, semi-annual payments, $1,000 Par, is expected to make all coupon payments...

A 10-year, 10% coupon bond, semi-annual payments, $1,000 Par, is expected to make all coupon payments but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975? a. 10.00% b. 6.77% c. None of the options are correct. d. 11.68% e. 6.68%

Complete the following table (use $1000 Par value, 10 years, & semi-annual coupon payments): Bond Coupon...

Complete the following table (use $1000 Par value, 10 years, & semi-annual coupon payments): Bond Coupon Rate Yield to Maturity Coupon Payment Bond Value Discount or Premium A 5.0% 4.5% B 6.0% 9.0% C 4.0% 8.0% D 9.0% 8.0% E 12.0% 15.0%

What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond...

What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond Coupon Rate Yield Price t Apple B ? 5.1% 1012.5 14 7. A bond that yields 6% pays a coupon of $20 semi-annually. Which of the following is most likely the price of the bond? $990 $1000 $1050 Not enough information to determine.

You purchased a bond with the following characteristics: $1,000 par value 6.5% coupon, annual payments 25...

You purchased a bond with the following characteristics: $1,000 par value 6.5% coupon, annual payments 25 years to maturity Callable in 7 years at $1,065. You paid $1063.92 for the bond. Macaulay duration is 13.34 years a. (5 pts) Calculate the yield to maturity. b. (5 pts) Calculate the yield to call. c. (5 pts) Assume market rates drop by one-half of one percent, what will be the new bond price? d. (5 pts) Using modified duration, estimate the value...

A 6.75% coupon rate bond makes annual interest rate payments. Par value is $1,000. The bond...

A 6.75% coupon rate bond makes annual interest rate payments. Par value is $1,000. The bond matures in 12 years. The required rate of return is 7.25%. What is the current price a 960.81   b 960.37   c 958.25   d 948.22   Refer to the previous question. What if the bond pays semi-annual interest payment. What is the value of a semi-annual bond. a 960.81   b 960.37   c 958.25   d 948.22  

Question