Question
In: Finance
Consider a bond (with par value = $1,000) paying a coupon rate of 9% per year...
Consider a bond (with par value = $1,000) paying a coupon rate of 9% per year semiannually when the market interest rate is only 5% per half-year. The bond has three years until maturity.
a. Find the bond's price today and six months from now after the next coupon is paid. (Round your answers to 2 decimal places.)
b. What is the total (six-month) rate of return on the bond? (Do not round intermediate calculations. Round your answer to the nearest whole percent.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider a bond (with par value = $1,000) paying a coupon rate of 9% per year...
Consider a bond (with par value = $1,000) paying a coupon rate
of 9% per year semiannually when the market interest rate is only
7% per half-year. The bond has three years until maturity.
a. Find the bond's price today and six months
from now after the next coupon is paid. (Round your answers
to 2 decimal places.)
b. What is the total (six-month) rate of return
on the bond? (Do not round intermediate calculations. Round
your answer to the...
Consider a bond (with par value = $1,000) paying a coupon rate of 8% per year...
Consider a bond (with par value = $1,000) paying a coupon rate
of 8% per year semiannually when the market interest rate is only
5% per half-year. The bond has three years until maturity.
a. Find the bond's price today and six months from now after the
next coupon is paid. (Round your answers to 2 decimal places.)
Current price
Price after 6 months
b. What is the total (six-month) rate of return on the bond? (Do
not round intermediate...
Consider a bond with a par value of $1,000, a coupon rate of 8%, and 10...
Consider a bond with a par value of $1,000, a coupon rate of 8%,
and 10 years until maturity. What is the most you should pay for
this asset if your required rate of return for assets like this is
5% and the coupon payments are paid annually? How does your answer
change if the bond is semi-annual? Does the semi-annual bond sell
at a premium or a discount?
Consider a bond paying a coupon rate of 9% per year semiannually when the market interest...
Consider a bond paying a coupon rate of 9% per year semiannually
when the market interest rate is only 3.6% per half-year. The bond
has six years until maturity.
a. Find the bonds price today and six months from now after the
next coupon is paid.
b. What is the total rate of return on the bond? (% per six
months)
5. Consider a bond paying a coupon rate of 9% per year semiannually when the market...
5. Consider a bond paying a coupon rate of 9% per year
semiannually when the market interest rate is only 6%. The bond has
five years until maturity. (15 points) a. Find the bond’s price
today and six months from now after the next coupon is paid. b.
What is the total rate of return on the bond?
Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate...
Calculate the value of a $1,000-par-value bond paying
quarterly interest at an annual coupon
interest rate of 8% and having 15 years until maturity if the
required return on similar-risk bonds is currently a 16% annual
rate paid quarterly.
You are considering a 25-year, $1,000 par value bond. Its coupon rate is 9%, and interest...
You are considering a 25-year, $1,000 par value bond. Its coupon
rate is 9%, and interest is paid semiannually. The data has been
collected in the Microsoft Excel Online file below. Open the
spreadsheet and perform the required analysis to answer the
question below.
If you require an "effective" annual interest rate (not a
nominal rate) of 9.3%, how much should you be willing to pay for
the bond? Do not round intermediate steps. Round your answer to the
nearest...
You are considering a 10-year, $1,000 par value bond. Its coupon rate is 9%, and interest...
You are considering a 10-year, $1,000 par value bond. Its coupon
rate is 9%, and interest is paid semiannually. If you require an
"effective" annual interest rate (not a nominal rate) of 8.16%,
then how much should you be willing to pay for the bond?
Present value=
payment=
future value=
annual rate=
periods=
compounding=
Consider the following two bonds. Bond A: 10-year maturity, 4% coupon rate, $1,000 par value Bond...
Consider the following two bonds.
Bond A: 10-year maturity, 4% coupon rate, $1,000 par value
Bond B: 5-year maturity, 4% coupon rate, $1,000 par value
Assuming that the YTM changes from 6% to 7%, calculate % change
in each bond’s price.
1) a. Consider a $1,000 par value bond with a 6% coupon rate paid semiannually, and...
1)
a. Consider a $1,000 par value bond with a 6% coupon rate paid
semiannually, and has 9 years to maturity. What is the price of the
bond if it is priced to yield 7%?
b. Cutler Co. issued 11-year bonds a year ago at a
coupon rate of 7.8 percent. The bonds make semiannual payments. If
the YTM on these bonds is 8.6 percent, what is the current bond
price?
c. A $1000 bond with a coupon rate of 6.2%...
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