Question

In: Finance

At the beginning of the​ year, you bought a ​$1,000 par value corporate bond with an...

At the beginning of the​ year, you bought a ​$1,000 par value corporate bond with an annual coupon rate of 14 percent and a maturity date of 13 years. When you bought the​ bond, it had an expected yield to maturity of 8 percent. Today the bond sells for ​$1,710.

a. What did you pay for the​ bond?

b. If you sold the bond at the end of the​ year, what would be your​ one-period return on the​ investment? Assume that you did not receive any interest payment during the holding period.

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond...
​(Bond valuation​) At the beginning of the​ year, you bought a ​$1,000 par value corporate bond with an annual coupon rate of 11 percent and a maturity date of 18 years. When you bought the​ bond, it had an expected yield to maturity of 9 percent. Today the bond sells for ​$1,400. a. What did you pay for the​ bond? b. If you sold the bond at the end of the​ year, what would be your​ one-period return on the​...
If you bought a 10-year bond issued by Delta, with a par value of $1,000 and...
If you bought a 10-year bond issued by Delta, with a par value of $1,000 and a coupon interest rate of 6%. At maturity you will receive A. $60. B. $600. C. $1,000. D. $1,600. E. More information would be required to answer the question.
Today, you bought one corporate semi-annual bond with $1,000 par value, 8% coupon rate, 10 years...
Today, you bought one corporate semi-annual bond with $1,000 par value, 8% coupon rate, 10 years left to maturity. The current interest rate of the bond is 10%. 15. What is the price of the bond today? a. $875.38 b. $877.11 c. $1,000.00 d. $1,135.90 16. How much interest (not just coupon) in total should the corporation pay you in the next five years? a. $400.00 b. $445.20 c. $447.40 d. $447.07 (Hint: you need to distinguish interest from coupon....
You bought an 8% annual coupon, 10 year maturity bond ($1,000 par value) when the discount...
You bought an 8% annual coupon, 10 year maturity bond ($1,000 par value) when the discount rate was 9%. A year later, the discount rate was 10%. What is your holding period rate of return over the year? Please also include financial calculator calculations.
Find the price of a bond. The time is today. The $1,000 par value corporate bond...
Find the price of a bond. The time is today. The $1,000 par value corporate bond you are interested in has a 5% coupon rate, paid semi-annually. The maturity of the bond is 20 years. The rating agencies have determined that this company should have a B+ rating, making its yield be 6%. Show a time line of these cash flows.   What is the price you will have to pay for the bond? N                I                 PV              PMT           FV
You bought a bond today that has a $1,000 par value and makes semiannual coupon payments....
You bought a bond today that has a $1,000 par value and makes semiannual coupon payments. The bond has a coupon rate of 8%, a YTM of 6%, and has 15 years to maturity. What is the price of this bond today? Six months later, the YTM goes up to 7%. If you sell the bond in 6 months after receiving a coupon payment, what do you expect the selling price of this bond? What will be your total dollar...
Develop a valuation model for a corporate bond with a par value at maturity of $1,000,...
Develop a valuation model for a corporate bond with a par value at maturity of $1,000, a maturity of 20 years, a coupon interest rate of 7%, and a yield to maturity of 4%. The coupons are assumed to be paid semi-annually. In your development and presentation, include a time line showing the relevant cash flows along with all of the steps that allow you to generate the value (price of the bond). Given the problem above, identify how the...
The current price of a 10-year, $1,000 par value bond is $1,000. Interest on this bond...
The current price of a 10-year, $1,000 par value bond is $1,000. Interest on this bond is paid every six months, and the simple annual yield is 14 percent. Given these facts, what is the annual coupon rate on this bond? a. 10% b. 12% c. 14% d. 17% e. 21%
Quoted Prices (% of $1,000 par value) Year Beginning of the Year End of the Year...
Quoted Prices (% of $1,000 par value) Year Beginning of the Year End of the Year Average Holding Period Return on High-Grade Corporate Bonds 2010 94.349 100.223 7.30% 2011 100.223 101.319 11.72% 2012 101.319 105.849 -6.89% 2013 105.849 110.776 7.90% 2014 110.776 121.592 9.11% In early January 2010 , you purchased $27,000 worth of some high-grade corporate bonds. The bonds carried a coupon of 11 5/8% and 2024. You paid 94.349 when you bought the bonds. Over the five years...
You hold a 25 year bond from Telus with a par value of $1,000 and a...
You hold a 25 year bond from Telus with a par value of $1,000 and a coupon rate of $70 (7%) a year. This bond is currently selling for $1,023. (No calculations are needed in this question). (a). What do you know about the yield of this bond? Explain. (b). If Telus incurred a large amount of debt what would likely happen to the: i. coupon rate on your Telus bond - explain ii. Yield to maturity on your Telus...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT