Bonds issued in the Philippines, make a coupon payments twice ayear. So, if an ordinary...

Bonds issued in the Philippines, make a coupon payments twice a year. So, if an ordinary bond has a coupon rate of 14%, then the owner will get a total of P140 a year, but this P140 will come in two payments of P70. Suppose we are examining such a bond with a face value P1,000. The yield to maturity is quoted at 16%.

Bond yields are quoted like APR’s; the quoted rate is equal to the actual rate per period multiplied by the number of periods.

In this case, with a 16% quoted yield and semi-annual payments , the true yield is 8% per six month.

The bond matures in 7 years. What is the bond’s price.

Solutions

Expert Solution

Face/Par Value of bond = P1000

Semi-Annual Coupon Bond = P1000*14%*1/2

= P70

No of coupon payments(n) = No of years to maturity*2 = 7 years*2

= 14%

Semi-annual YTM = 16%/2 = 8%

Calculating the Market price of Bond:-

Price = P577.097 + P340.461

Price = P917.56

So,the Bond Price is P917.56

jeff jeffy answered 2 years ago

Next > < Previous

Related 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 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...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 14 years to maturity, and a coupon rate of 8 percent paid annuallly. If the yield to maturity is 11 percent, what is the current price of the bond? Multiple Choice €830.07 €1,030.00 $751.02 €1,251.33 €790.54

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 6.2 percent paid annually. If the yield to maturity is 7.3 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

1. Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued...

1. Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 9 years to maturity, and a coupon rate of 8 percent paid annuallly. If the yield to maturity is 10 percent, what is the current price of the bond? €1,030.00 €1,128.94 $840.58 €929.06 €884.82 2. Gabriele Enterprises has bonds on the market making annual payments,...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 9 years to maturity, and a coupon rate of 6 percent paid annually. If the yield to maturity is 10 percent, what is the current price of the bond?

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 6.1 percent paid annually. If the yield to maturity is 7.2 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 6 years to maturity, and a coupon rate of 6 percent paid annuallly. If the yield to maturity is 10 percent, what is the current price of the bond? rev: 02_28_2019_QC_CS-161195 Multiple Choice $784.50 €1,200.69 €867.08 €825.79 €1,030.00

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of? 1000, 25 years to maturity, and a coupon rate of 6.4 percent paid annually. If the yield to maturity is 7.5 percent, what is the current price of the bond? If the yield to maturity is 8.2 percent, what is the current price of the bond? (Do...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 25 years to maturity, and a coupon rate of 7.1 percent paid annually. If the yield to maturity is 8.2 percent, what is the current price of the bond?

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere...

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 10 years to maturity, and a coupon rate of 6.8 percent paid annually. If the yield to maturity is 7.9 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) A Japanese...

Subjects