Question
In: Accounting
Suppose a seven-year, $1,000 bond with a 7.8% coupon rate and semiannual coupons is trading with...
Suppose a seven-year, $1,000 bond with a 7.8% coupon rate and semiannual coupons is trading with a yield to maturity of 6.39%.
a. Is this bond currently trading at a discount, at par, or at a premium? Explain.
b. If the yield to maturity of the bond rises to 7.09%
(APR with semiannual compounding), what price will the bond trade for?
a. Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best choice below.)
A.
Because the yield to maturity is less than the coupon rate, the bond is trading at a discount.
B.
Because the yield to maturity is greater than the coupon rate, the bond is trading at a premium.
C.
Because the yield to maturity is less than the coupon rate, the bond is trading at a premium.
D.
Because the yield to maturity is greater than the coupon rate, the bond is trading at par.
b. If the yield to maturity of the bond rises to
7.09%
(APR with semiannual compounding), what price will the bond trade for?The new price of the bond is
$nothing.
(Round to the nearest cent.)
Solutions
Expert Solution
for formulas and calculations, refer to the image below -
ekkarill92 answered 1 year agoRelated Solutions
Suppose a seven-year, $1,000 bond with a 7.5% coupon rate and semiannual coupons is trading with...
Suppose a seven-year,
$1,000
bond with
a
7.5%
coupon rate and semiannual coupons is trading with a yield to
maturity of
6.39%.
a. Is this bond currently trading at a discount, at par, or at
a premium? Explain.
b. If the yield to maturity of the bond rises to
7.34%
(APR with semiannual compounding), what price will the bond
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Suppose a seven-year, $1,000 bond with an 8.3% coupon rate and
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b. If the yield to maturity of the bond rises to 7.42% (APR
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Suppose a seven-year, $1,000 bond with a 8.03 % coupon rate and semiannual coupons is trading...
Suppose a seven-year, $1,000 bond with a 8.03 % coupon rate and
semiannual coupons is trading with a yield to maturity of
6.57%.
a. Is this bond currently trading at a
discount, at par, or at a premuim? Explain.
b. If the yield to maturity of the bond rises
to 7.26 % (APR with semiannual compounding), at what
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Suppose a seven-year, $1,000 bond with a 8.58% coupon rate and semiannual coupons is trading with...
Suppose a seven-year, $1,000 bond with a 8.58% coupon rate and
semiannual coupons is trading with a yield to maturity of
7.09%.
a. Is this bond currently trading at a discount, at par, or at
a premuim? Explain.
b. If the yield to maturity of the bond rises to 7.40% (APR
with semiannual compounding), at what price will the bond
trade?
a. Is this bond currently trading at a discount, at par, or at
a premuim? Explain.
The bond is...
Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with...
Suppose a seven-year, $1000 bond with an 8% coupon rate and
semiannual coupons is trading with a yield to maturity of
6.75%.
Is this bond currently trading at a discount, at par, or at a
premium? Explain.
If the yield to maturity of the bond rises to 7.00%
(APR with semiannual compounding), what price will the
bond trade for?
**please list out step by step actions, please show the
formulas used, please DONT USE excel**
suppose a seven-year, $1000 bond with a 7.9% coupon rate and semiannual coupons is trading with...
suppose a seven-year, $1000 bond with a 7.9% coupon rate and
semiannual coupons is trading with a yield to maturity of
6.33%
if
the yield to maturity of the bond rises to 7.29% (APR with
semiannual compounding), what price will the bond trade for?
Suppose a ten-year, $1,000 bond with an 8.3% coupon rate and semiannual coupons is trading for...
Suppose a ten-year, $1,000 bond with an 8.3% coupon rate and
semiannual coupons is trading for $1,034.16.
a. What is the bond's yield to maturity (expressed as an APR
with semiannual compounding)?
b. If the bond's yield to maturity changes to 9.8% APR, what
will be the bond's price?
Suppose a ten-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading for...
Suppose a ten-year,
$1,000
bond with an
8.5%
coupon rate and semiannual coupons is trading for
$1,034.79.
a. What is the bond's yield to maturity (expressed as an APR
with semiannual compounding)?
b. If the bond's yield to maturity changes to
9.4%
APR, what will be the bond's price?
Suppose a ten-year, $1,000 bond with an 8.7% coupon rate and semiannual coupons is trading for...
Suppose a ten-year, $1,000 bond with an 8.7% coupon rate and
semiannual coupons is trading for $1,035.67.
a. What is the bond's yield to maturity (expressed as an APR
with semiannual compounding)?
b. If the bond's yield to maturity changes to 9.7% APR, what
will be the bond's price?
nothing%. (Round to two decimal places.)
Suppose a ten-year, $1,000 bond with an 8.8% coupon rate and semiannual coupons is trading for...
Suppose a ten-year,
$1,000
bond with an
8.8%
coupon rate and semiannual coupons is trading for
$1,035.09.
a. What is the bond's yield to maturity (expressed as an APR
with semiannual compounding)?
b. If the bond's yield to maturity changes to
9.7%
APR, what will be the bond's price?
a. What is the bond's yield to maturity (expressed as an APR
with semiannual compounding)?
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