Question
In: Finance
A premium annual-pay bond pays a $77 coupon, has a yield to maturity of 6%, and...
A premium annual-pay bond pays a $77 coupon, has a yield to maturity of 6%, and is priced at $1,198.7. How many years till the bond matures? Answer in years to at least two decimal places.
Solutions
Expert Solution
At aroud 20.74 years bond price is equal to given price.
| Particulars | Cash flow | Discount factor | Discounted cash flow |
| present value Interest payments-Annuity (6%,20.74 periods) | $ 77.00 | 11.68924 | $ 900.07 |
| Present value of bond face amount -Present value (6%,20.74 periods) | $ 1,000.00 | 0.29865 | $ 298.65 |
| Bond price | $ 1,198.72 | ||
| Face value | $ 1,000.00 | ||
| Premium/(Discount) | $ 198.72 |
Answer is 20.74 years
jeff jeffy answered 1 year agoRelated Solutions
What is the coupon rate of an annual coupon bond that has a yield to maturity...
What is the coupon rate of an annual coupon bond that has a
yield to maturity of 5.5%, a current price of $949.81, a par value
of $1,000 and matures in 15 years?
6.33%
4.70%
3.07%
5.00%
The present value of a bond that has a yield-to-maturity of 10% and pays a coupon...
The present value of a bond that has a yield-to-maturity of 10%
and pays a coupon of $100 is equal to its par value.
True
False
A 6% coupon, 24-year annual bond has a yield to maturity of 4.4%. Assuming the par...
A 6% coupon, 24-year annual bond has a yield to maturity of
4.4%. Assuming the par value is $1,000 and the YTM does not change
over the next year, what will the price of the bond be today? What
will the bond price be in one year? What is the capital gains yield
for this bond?
Current yield and yield to maturity An annual coupon bond has a $1,000 face value, coupon...
Current yield and yield to maturity An annual coupon bond has a
$1,000 face value, coupon rate of 5%, will mature in 10 years, and
currently sells for $810.34.
a. What is the yield to maturity of the bond?
b. What is the current yield of the bond?
c. Why does the current yield differ from the yield to
maturity?
d. One year later, the market rates have increased to 8%. Assume
that you have just received a coupon payment...
You buy a 6% annual coupon bond, with 10-years to maturity, when its yield to maturity...
You buy a 6% annual coupon bond, with 10-years to maturity, when
its yield to maturity is 5%. One year later, the yield to maturity
is 6%. What is your return over the year?
A 6-year 7.2% annual coupon bond is selling to yield 6.5%. The bond pays interest annually....
A 6-year 7.2% annual coupon bond is selling to yield 6.5%. The
bond pays interest annually. The par value of the bond is $100.
a. What is the price of the 6-year 7.2% coupon bond selling to
yield 6.5%?
b. What is the price of this bond one year later assuming the
yield is unchanged at 6.5%?
c. Suppose that one year later the yield of the bond decreases
to 6.3%. What is the price change attributable to moving to...
a) Explain the relationship between the yield to maturity of a premium bond and its coupon...
a) Explain the relationship between the yield to maturity of a
premium bond and its coupon rate. b) ABC Ltd issues two
different bonds with the same yield to maturity: a 20-year zero
coupon bond a 15-year semi-annual coupon bond Explain which bond is
subject to less interest rate risk. c) ABC Ltd is
planning to issue 16-year semi-annual coupon bonds with a face
value of $1,000 and a coupon rate of 6.5%. The nominal yield to
maturity of potential...
a) Explain the relationship between the yield to maturity of a premium bond and its coupon...
a) Explain the relationship between the yield to maturity of a
premium bond and its coupon rate.
b) ABC Ltd issues two different bonds with the same yield to
maturity:
a 20-year zero coupon bond
a 15-year semi-annual coupon bond
Explain which bond is subject to less interest rate risk.
c) ABC Ltd is planning to issue 16-year semi-annual coupon bonds
with a face value of $1,000 and a coupon rate of 6.5%. The nominal
yield to maturity of potential...
A firm has a bond with 12 years to maturity, and pays an annual coupon payment...
A firm has a bond with 12 years to maturity, and pays an annual
coupon payment of 8%. The bond is currently selling for $1,122.40.
When the company issues a new bond, there will be administrative
costs and flotation costs estimated at $25 per bond. If the firm
decides to issue new 10-year bonds today, what would be the
effective cost of the new bonds, assuming a 35% marginal tax
rate?
A. 6.85 percent B. 6.94 percent C. 7.19 percent...
A 10-year bond has a 10 percent annual coupon and a yield to maturity of...
A 10-year bond has a 10 percent annual coupon and a yield to
maturity of 12 percent. The bond can be called in 5 years at a call
price of $1,050 and the bond’s face value is $1,000. Which of the
following statements is most correct? Please explain why.
a. The bond’s current yield is greater than 10
percent.
b. The bond’s yield to call is less than 12
percent.
c. The bond is selling at...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
- Using one quantitative and one qualitative health policy research method described in this chapter, design a...
- What is the Rawls' solution to the age-old question of social (economic / distributive) justice?...
ADVERTISEMENT