Question
In: Finance
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon...
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon rate = 4.6%, Pays = annually.
948.85
|
990.87 |
|
690.83 |
946.11
None of the above
Solutions
Expert Solution
| 5.55% | ||||||
| NPV@ 5.55% | ||||||
| Year | Outflow | Inflow | Annual flow | PV factor | PV-Cash flow | |
| 1 | 0 | 46.00 | 46.00 | 0.947 | 43.58 | |
| 2 | 0 | 46.00 | 46.00 | 0.898 | 41.29 | |
| 3 | 0 | 46.00 | 46.00 | 0.850 | 39.12 | |
| 4 | 0 | 46.00 | 46.00 | 0.806 | 37.06 | |
| 5 | 0 | 46.00 | 46.00 | 0.763 | 35.11 | |
| 6 | 0 | 46.00 | 46.00 | 0.723 | 33.27 | |
| 7 | 0 | 46.00 | 46.00 | 0.685 | 31.52 | |
| 7 | 0 | 1,000.00 | 1,000.00 | 0.685 | 685.16 | |
| Total PV | 946.11 | |||||
| This PV of all future inflows will be cost of bond today so option D is correct | ||||||
jeff jeffy answered 2 years agoRelated Solutions
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