Question

In: Finance

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 as periodic rates, but give the answer as an annual rarte.

PV=

FV=

PMT=

N=

I=

d. If market interest rates go up on the bond by one percentage point, what should you be willing to pay for it? Write your inputs as periodic rates.

PV=
FV=
PMT=
N=
I=

Expert Solution

a). Semiannual coupon interest rate payment = (6%/2)*1000

= $30

b). Number of periods semi-annual interest payment to be received = 10*2 = 20

jeff jeffy answered 2 years ago

(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*

(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual...

(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual coupon interest rate is 8 percent and the market's required yield to maturity on a comparable-risk bond is 13 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? a.The value of this bond if it paid interest annually would be $

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...

A bond with a face value of $1,000 matures in 9 years and has a 7%...

A bond with a face value of $1,000 matures in 9 years and has a 7% semiannual coupon. The bond currently is traded at $920. Which of the following statements is CORRECT?

A bond with a face value of $1,000 matures in 12 years and has a 9...

A bond with a face value of $1,000 matures in 12 years and has a 9 percent semiannual coupon. The bond has a nominal yield to maturity of 6.85%, and it can be called in 4 years at a call price of $1,045. Assume equilibrium, which of the following statement is correct? (hint: what kind of bond is this?) Select one: a. The bond is currently traded at a discount. b. The expected current yield will decrease. c. All else...

a bond matures in Feb, 2020. it has a face value at $1,000. a 10% coupon...

a bond matures in Feb, 2020. it has a face value at $1,000. a 10% coupon paid semi-annually, and a required return of 12% per year. (compounded semi-annually). At what price should the bond sell today. (Use financial calculator in details, and simple solution)

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.

An 8% coupon bond matures in 5 years. The face value is $1,000 and has a...

An 8% coupon bond matures in 5 years. The face value is $1,000 and has a current yield of 9.1%. What is the bond's current market price?

Bond valuation) Calculate the value of a bond that matures in 19 years and has a...

Bond valuation) Calculate the value of a bond that matures in 19 years and has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 11 percent. The value of the bond is $ (Round to the nearest cent.)

A zero coupon bond with a face value of $1,000 that matures in 8 years sells...

A zero coupon bond with a face value of $1,000 that matures in 8 years sells today for $556. What is the yield to maturity? (Use annual compounding.)