Question

In: Finance

You are considering a corporate bond with 10% coupon bonds with semiannual payments and a yield...

You are considering a corporate bond with 10% coupon bonds with semiannual payments and a yield to maturity of 11% . The bonds mature in 9 years. What is the market price per bond if the face value is $1,000? (Round answers to two decimals, enter answer without $ or "," , such as 1234.78)

Solutions

Expert Solution

Semiannual interest = $1,000 * 0.10 * 6/12 = $50

The price of the bond is:

Current bond price = $50(PVIFA 5.5%,18) + $1,000(PVIF 5.5%,18)

Current bond price = ($50 * 11.2460744644) + ($1,000 * 0.38146590435)

Current bond price = $943.77

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Landover ridge offers a 10 percent annual coupon bond with semiannual payments. The yield to maturity...
Landover ridge offers a 10 percent annual coupon bond with semiannual payments. The yield to maturity is 8 percent and the bonds mature in 8 years. What is the price per bond if the face value is $1000?
Consider a bond with semiannual payments with 10 years to maturity, coupon of 10%, 8% as...
Consider a bond with semiannual payments with 10 years to maturity, coupon of 10%, 8% as Yield to Maturity (YTM),and  face value of 1000, a. Find the price of the bond at t=0. b. Interest rates drop by 1% after 1 year. Find the new Price of the bond. c. Interest rates drop to 0% after two years from time 0. Find the new price. d. Interest rates turn negative to -5% after 3 years from t= 0. Find the new...
i) Consider a semiannual bond with an 8% coupon and with yield to maturity 10%. If...
i) Consider a semiannual bond with an 8% coupon and with yield to maturity 10%. If the bond’s YTM remains constant, then in one year, will the bond price be higher, lower, of unchanged? Why? ii) Brothers Corp expects to earn $6 per share next year. The firm’s ROE is 15% and its plowback ratio is 50%. If the firm’s market capitalization rate is 13%, what is the present value of its growth opportunities? iii) Finance Corporation’s free cash flow...
Oil Well Supply offers 7.5 percent coupon bonds with semiannual payments and a yield to maturity...
Oil Well Supply offers 7.5 percent coupon bonds with semiannual payments and a yield to maturity of 7.68 percent. The bonds mature in 6 years. what is the price?
Siamtop Inc. offers a 15-year coupon bond with semiannual payments. The yield to maturity is 7.34...
Siamtop Inc. offers a 15-year coupon bond with semiannual payments. The yield to maturity is 7.34 percent and the bonds sell at 96 percent of par. What is the coupon rate? Show work.
A bond outstanding with 10 years to maturity, an 9.25% nominal coupon, semiannual payments, and a...
A bond outstanding with 10 years to maturity, an 9.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 4.5 years at a price of $1,100. What is the bond's nominal yield to call?
A company issues a 10-year, 4% coupon bond with semiannual coupon payments. On release, it has...
A company issues a 10-year, 4% coupon bond with semiannual coupon payments. On release, it has a price of $90 per $100 of face value. What is the yield to maturity of this bond when it is released?   A. 5.31% B. 2.65% C. 3.18% D. 5.30% C is incorrect. which one is correct and why?
Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 10...
Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 10 percent, has a YTM of 8 percent, and has 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond pays a coupon of 8 percent, has a YTM of 10 percent, and also has 16 years to maturity. What is the price of each bond today? (Do not round intermediate calculations and round your final answers to 2...
Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 10...
Miller Corporation has a premium bond making semiannual payments. The bond pays a coupon of 10 percent, has a YTM of 8 percent, and has 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond pays a coupon of 8 percent, has a YTM of 10 percent, and also has 16 years to maturity. What is the price of each bond today? (Do not round intermediate calculations and round your answers to 2 decimal...
Samuel, Inc. bonds have a 3% coupon rate with semiannual coupon payments. They have 10 years...
Samuel, Inc. bonds have a 3% coupon rate with semiannual coupon payments. They have 10 years to maturity and a par value of $1,000. Compute the value of Samuel's bonds if investors' required rate of return is 5%. $1,178.85 $726.34 $845.57 $945.73
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT