Question

In: Finance

Bond Valuation A corporate bond has a face value of $1,000. The bond has an 8%...

Bond Valuation

A corporate bond has a face value of $1,000. The bond has an 8% coupon rate and it has 13 years to maturity. The interest rate on similar bonds is 6%. Assume interest is paid annually. What is the current price of this bond?

Assume everything in #1 above, except the interest rate on similar bonds is 4%. What is the current price of this bond?

Assume everything in #1 above, except the interest rate on similar bonds is 4% and the bond pays interest semiannually. What is the price of this bond?

please show me using excel

Solutions

Expert Solution

A)

Bond price at 6% is $1,177.05

B)

Bond price at 4% is $1,399.43

C)

Bond price at 4% semi annual compounding is $1,402.42


Related Solutions

2. Bond Valuation: You are analyzing a bond. The bond has a $1,000 face value, matures...
2. Bond Valuation: You are analyzing a bond. The bond has a $1,000 face value, matures in 10 years, and pays a 6.0% annual interest coupon payment. The bond pays interest semi-annually. a. What is the amount of interest (in dollars) you can expect to receive from this bond every six months? b. How many semiannual interest payments will you receive? c. If the bond sells for $1,025.00, what is the bond’s current yield to maturity (YTM)? Write your inputs...
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The...
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $950. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? please show all steps in the calculation.
  ​(Bond valuation) A bond that matures in 8 years has a ​$1,000 par value. The annual...
  ​(Bond valuation) A bond that matures in 8 years has a ​$1,000 par value. The annual coupon interest rate is 9 percent and the​ market's required yield to maturity on a​ comparable-risk bond is 18 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually? *Someone previously answered this with annually = $604.56 and semiannually = $596.89 and the annual number is incorrect*
A bond has a face value of $1,000, a coupon rate of 8%, and a yield...
A bond has a face value of $1,000, a coupon rate of 8%, and a yield to maturity of 9.5%. If the bond matures in 8 years, what is the price of the bond? (Assume coupons are paid annually.)
Develop a valuation model for a corporate bond with a par value at maturity of $1,000,...
Develop a valuation model for a corporate bond with a par value at maturity of $1,000, a maturity of 20 years, a coupon interest rate of 7%, and a yield to maturity of 4%. The coupons are assumed to be paid semi-annually. In your development and presentation, include a time line showing the relevant cash flows along with all of the steps that allow you to generate the value (price of the bond). Given the problem above, identify how the...
​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond...
​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond with an annual coupon rate of 11 percent and a maturity date of 18 years. When you bought the​ bond, it had an expected yield to maturity of 9 percent. Today the bond sells for ​$1,400. a. What did you pay for the​ bond? b. If you sold the bond at the end of the​ year, what would be your​ one-period return on the​...
A bond has a face value of $1,000, coupon rate of 8%, and matures in 6...
A bond has a face value of $1,000, coupon rate of 8%, and matures in 6 years. Imagine that the market interest rate is 6%, but immediately after you buy the bond the rate drops to 5%. What is the immediate effect on the bond price? Hint: the effect is the price of the bond after the change minus the price of the bond before the change.
A twelve-year corporate bond has a coupon rate of 9%, a face value of $1,000, and...
A twelve-year corporate bond has a coupon rate of 9%, a face value of $1,000, and a yield to maturity of 11%. Assume annual interest payments. (i) (2 pts) What is the current price? (ii) (3 pts) What is the duration (Macaulay’s)? (iii) (2 pts) Compare this bond to a eight-year zero coupon bond. Which has more interest-rate risk (which bond price changes more given a 1 percentage point change in the interest rate)? (iv) (2 pts) Using duration, what...
A 30-year corporate bond has a face value of $1,000 and a coupon rate of 6%...
A 30-year corporate bond has a face value of $1,000 and a coupon rate of 6% paid annually. At the end of year 12 the Yield to Maturity is 8%. a. How much money will the holder of the bond receive at the end of year 30? b. What is the bond’s price at the end of year 12? c. What will the bond’s interest payment be at the end of year 12? d. If the Yield to Maturity later...
Last year, Joan purchased a $1,000 face value corporate bond with an 8% annual coupon rate...
Last year, Joan purchased a $1,000 face value corporate bond with an 8% annual coupon rate and a 25-year maturity. At the time of the purchase, it had an expected yield to maturity of 9.62%. If Joan sold the bond today for $1,053.36, what rate of return would she have earned for the past year? Round your answer to two decimal places.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT