Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon

1. Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 4.75%, based on semiannual compounding. What is the bond's current price?

2. Curtis Corporation's non-callable bonds currently sell for $1,165. They have a 15-year maturity, an annual coupon of $95, and a par value of $1,000. What is their yield to maturity?

Expert Solution

1.

Data:	Time to Maturity		10	Years
	Coupon-Semi Annual		6.25%
	Payment Per Year		2
	Par Value		$ 1,000
	Interest Rate (Rd)		4.75%
	PMT		$ 62.50
	Bond Current Price		?

	Formula Used:		PV(rate, nper, pmt, -FV)
		=	PV(4.75%/2, 10*2, 62.50/2,1000)
		=	$1,118.31

2.

Data:	Current Price		$ 1,165.00
	Time to Maturity		15	Years
	Annual Coupon Amount		$ 95.00
	Par Value		$ 1,000.00
	Yield To Maturity		?

	Formula Used:		RATE(NPER, PMT, -PV, FV)
		=	RATE(15, 95, -1165, 1000)
		=	7.62%

7.62%

Junaid answered 2 years ago

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