12. What is the semi-annual coupon bond’s nominal yield to maturity (YTM), if the years to...

12. What is the semi-annual coupon bond’s nominal yield to maturity (YTM), if the years to maturity is 15 years, and sells for 119% with coupons rate of 10%? Assume the par value of the bond is $1,000.

13. The current price of a 10-year, $1,000 par value bond is $1,158.91. Interest on this bond is paid every six months, and the nominal annual yield is 14 percent. Given these facts, what is the annual coupon rate on this bond?

Solutions

Expert Solution

Q12.
Par value of bond					1000
Market value of bonds (1000*119%)					1190
Semi annual cash interest (100010%6/12)					50

PVf at 3.91% for 30 periods					0.316431
Annuity for 30 periods at 3.91%					17.48257

Present value of maturity					316.431
Present value of interest					874.1285
Total Issue price					1190.5

Therefore.
Semi annual yield to maturity: 3.91%

Q13.
Par value of bonds					1000
Market value of bonds					1158.91
Semi annual cash interest be					x

PVF at 7% for 20 periods					0.258419
Annuity PVF at 7% for 20 perriods					10.59401

Present value of maturity					258.419
Present value of interest					10.59401 x
issue price					258.42 + 10.59401x

As per question
258.42+ 10.59401 x= 1158.91
x= 85
Semi annual interest = 85
Annual interest = 85*2 = 170
Annual coupon rate = 170/1000*100 = 17%

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

What is the semi-annual coupon bond’s nominal yield to maturity (YTM), if the years to maturity...

What is the semi-annual coupon bond’s nominal yield to maturity (YTM), if the years to maturity is 15 years, and sells for 119% with coupons rate of 10%? Assume the par value of the bond is $1,000

Consider a 5- year bond with a semi-annual 10% coupon and a yield to maturity(ytm) of...

Consider a 5- year bond with a semi-annual 10% coupon and a yield to maturity(ytm) of 9.00%. what is the duration of this bond in years?

What is the yield-to-maturity of a $1,000, 7% semi-annual coupon bond that matures in 20 years...

What is the yield-to-maturity of a $1,000, 7% semi-annual coupon bond that matures in 20 years and currently sells for $990? 7.7% 7.1% 3.55% 14.15%

1 Calculate the Yield to Maturity (YTM) of a 10-year annual coupon-ed bond with a coupon...

1 Calculate the Yield to Maturity (YTM) of a 10-year annual coupon-ed bond with a coupon rate of 7%, a price of $1050, and a face value of $1000. 2 a Calculate the Yield to Maturity (YTM) of a 10-year semiannual coupon-ed bond with a coupon rate of 7%, a price of $1050, and a face value of $1000. b Calculate this bond's Current Yield (CY). 3 In previous Questions 4 and 5, with all the same maturity, coupon...

A bond has a $1,000 par value, 7 years to maturity, and a 12% semi-annual coupon...

A bond has a $1,000 par value, 7 years to maturity, and a 12% semi-annual coupon and sells for $947. What is its yield to maturity (YTM)?

For a semi-annual coupon bond with 3 years to maturity, an annual coupon of 8% (paid...

For a semi-annual coupon bond with 3 years to maturity, an annual coupon of 8% (paid 4% each six-month period), and a current yield to maturity of 4.5%, What is the Macauley duration of this bond? What is the modified duration of this bond? An investor owns $100M (market value or price NOT face or par) of these bonds, what is the Dollar Duration of this position? What is the price elasticity of this bond for a 1bp increase in...

Consider a 3-year maturity annual 9% coupon paying bond with a YTM of 12%. a. What...

Consider a 3-year maturity annual 9% coupon paying bond with a YTM of 12%. a. What is the Duration of this bond? b. What will be the predicted price of this bond if the market yield increases by 100 basis points. [Remember, 100 basis points = 1% point]? You must use the duration (calculated in the part above) to get full points for this question.

3. A $1,000 par bond has a 5% semi-annual coupon and 12 years to maturity. Bonds...

3. A $1,000 par bond has a 5% semi-annual coupon and 12 years to maturity. Bonds of similar risk are currently yielding 6.5%. a. What should be the current price of the bond? b. If the bond’s price five years from now is $1,105, what would be the yield to maturity for the bond at that time? c. What will the price of this bond be 1 year prior to maturity if its yield to maturity is the same as...

The YTM (yield to maturity) on a one-year zero-coupon bond is 5% and the YTM on...

The YTM (yield to maturity) on a one-year zero-coupon bond is 5% and the YTM on a two-year zero-coupon bond is 6%. The treasury is planning to issue a 2-year, annual coupon bond with a coupon rate of 7% and a face value of $1,000. a) Compute the value of the two-year coupon bond. b) Compute the yield to maturity of the two-year coupon bond. c) If the expectations hypothesis is correct, what is the market expectation of the price...

A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%.

A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%. If the current price is 85.618% of PAR, what must be the tenor, in years?2. (5 pts) A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%. If the current price is 85.618% of PAR, what must be the tenor, in years?

Subjects