Question

In: Finance

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

Solutions

Expert Solution

Semiannual interest = $1,000 * 0.03 * 6/12 = $15

Current bond price = $15(PVIFA 2.5%,20) + $1,000(PVIF 2.5%,20)

Current bond price = ($15 * 15.5891622844) + ($1,000 * 0.61027094279)

Current bond price = $845.57

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

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...
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)
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?
Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has six years to maturity, whereas the Hardy Corp. bond has 15 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign....
Laurel, Inc., and Hardy Corp. both have 9 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 9 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has 3 years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If interest rates suddenly rise by 2 percent, the percentage change in the price of Bonds Laurel, Inc., and Hardy Corp. is ___ percent and ___ percent, respectively. (Negative amounts should be indicated by a minus sign. Do...
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has six years to maturity, whereas the Hardy Corp. bond has 19 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign....
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are currently priced at the par value of $1,000. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of each bond? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign....
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 7 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has six years to maturity, whereas the Hardy Corp. bond has 19 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers...
Laurel, Inc., and Hardy Corp. both have 9 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 9 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has five years to maturity, whereas the Hardy Corp. bond has 18 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers...
Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual interest payments,...
Laurel, Inc., and Hardy Corp. both have 8 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has three years to maturity, whereas the Hardy Corp. bond has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT