Question

In: Accounting

Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...

Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 4.36% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 4.91% p.a. Assume that this corporate bond has a 2.4% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places.

Solutions

Expert Solution

Answer:-

According to data- Calculate the purchase price for 1 unit of this corporate bond.

---------------------------------#################-----------------------------------------------

please give me an upvote

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 2.18% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.99% p.a. Assume that this corporate bond has a 2.3% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 2.19% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.62% p.a. Assume that this corporate bond has a 7.1% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 4.57% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.90% p.a. Assume that this corporate bond has a 7.5% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
You purchase today a callable annual coupon rate bond under the following conditions: Bond characteristics: Coupon...
You purchase today a callable annual coupon rate bond under the following conditions: Bond characteristics: Coupon rate: 7.5% Maturity of bond: 20 years Call Premium: 8% Time to call period: 4 years Current YTM: 8.5% Expected hold assumptions: Expected hold time: 4 years Reinvestment rate (average money market return): 2.1% Expected YTM (non-callable bonds) at sale: 4.0% Based upon the above items, find the Horizon Yield (HY) for this bond position.
You purchase a bond today for $900 that has a 5% coupon rate, paid semi-annually, and...
You purchase a bond today for $900 that has a 5% coupon rate, paid semi-annually, and has 10 years to maturity. The face value of the bond is $1,000. One year later you sell the bond for $1,020 a) Calculate the Holding Period Return (HPR) (in %) over the one year that you held the bond. (8) b) Do you think interest rates increased or decreased over the one year period that you held the bond? Explain briefly. (5)
Coupon rate for a $1000 corporate bond is 9%. This bond is paying coupon semi-annually and...
Coupon rate for a $1000 corporate bond is 9%. This bond is paying coupon semi-annually and will mature in 9 years. If the current market yield for this bond is 8%, what would be the value of this bond?
1) Kyle B purchased a bond for $1,136.31 today. The bond has a 4.29% coupon rate....
1) Kyle B purchased a bond for $1,136.31 today. The bond has a 4.29% coupon rate. At the end of one year, just after you received the coupon, you decide to sell the bond. The best bid for your bond is $1,098.39. If you accept the best bid, what will your return be? (Express as a %, not a decimal. If your answer is 10%, just enter 10) 2) What is the cause of the Time Value of Money? Why...
Question 1:: Consider a corporate bond with the face value of $1,000, the coupon rate of...
Question 1:: Consider a corporate bond with the face value of $1,000, the coupon rate of 8% per annum, paying coupons semi-annually and the remaining term to maturity of 6 years. The current required yield-to-maturity of this bond is 6% per annum. Suppose an investor buys one bond and holds it for two years. At the end of year 2, required yield-to-maturity is expected to rise from 6% to 8% per annum. Find the investor's annual rate of return over...
A corporate bond has a face value of $1 000, a coupon rate of interest of...
A corporate bond has a face value of $1 000, a coupon rate of interest of 10.5% per annum, payable semi-annually, and 20 years remaining to maturity. The market interest rate for bonds of similar risk and maturity is currently 8.5% per annum. Required: i. What is the coupon payment of the bond? (1 mark) ii. What is the present value of the bond? iii. If the coupon payment is payable annual (based on the same information), what is the...
A corporate bond has a face value of $1 000, a coupon rate of interest of...
A corporate bond has a face value of $1 000, a coupon rate of interest of 10.5% per annum, payable semi-annually, and 20 years remaining to maturity. The market interest rate for bonds of similar risk and maturity is currently 8.5% per annum. Required: i. What is the coupon payment of the bond? (1 mark) ii. What is the present value of the bond? iii. If the coupon payment is payable annual (based on the same information), what is the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT