Question
In: Finance
1. What is the value of a 10-year bond outstanding with 6% annual required rate and...
1. What is the value of a 10-year bond outstanding with 6%
annual required rate and 4% annual payment?
A.
$852.80
B.
$1097.19
C.
$1000
D.
$760.06
QUESTION 7
1. What is the value of a 10-year bond outstanding with 8
years left in “year-to-maturity” 13% annual required rate and 8%
annual payment?
A.
$760.06
B.
$1000
C.
$1097.19
D.
$852.80
QUESTION 8
1. What is the value of a 10-year bond outstanding with 4
years left in “year-to-maturity” 9% annual required rate and 12%
annual payment?
A.
$1000
B.
$760.06
C.
$852.80
D.
$1097.19
QUESTION 9
1. What is the annual required rate of a 10-year bond that has
12% annual payment and $1192.53 in PV?
A.
7%
B.
9%
C.
14%
D.
16%
QUESTION 10
1. What is the annual required rate of a 10-year bond that has
10% annual payment rate and $791.36 in PV?
A.
14%
B.
7%
C.
9%
D.
16%
Solutions
Expert Solution
1)
Coupon = 0.04 * 1000 = 40
Price = Coupon * [1 - 1 / (1 + r)n] / r + FV / (1 + r)n
Price = 40 * [1 - 1 / (1 + 0.06)10] / 0.06 + 1000 / (1 + 0.06)10
Price = 40 * 7.36009 + 558.39478
Price = $852.80
You can also find this using a financial calculator:
FV 1000
PMT 40
I/Y 6
N 10
CPT PV
2)
Coupon = 0.08 * 1000 = 80
Price = Coupon * [1 - 1 / (1 + r)n] / r + FV / (1 + r)n
Price = 80 * [1 - 1 / (1 + 0.13)8] / 0.13 + 1000 / (1 + 0.13)8
Price = 80 * 4.79877 + 376.15986
Price = $760.06
You can also find this using a financial calculator:
FV 1000
PMT 80
I/Y 13
N 8
CPT PV
3)
Coupon = 0.12 * 1000 = 120
Price = Coupon * [1 - 1 / (1 + r)n] / r + FV / (1 + r)n
Price = 120 * [1 - 1 / (1 + 0.09)4] / 0.09 + 1000 / (1 + 0.09)4
Price = 120 * 3.23972 + 708.42521
Price = $1,097.19
You can also find this using a financial calculator:
FV 1000
PMT 80
I/Y 13
N 8
CPT PV
4)
Coupon = 0.12 * 1000 = 120
Annual required rate = 9%
Keys to use in a financial calculator:
FV 1000
PMT 120
N 10
PV -1192.53
CPT /Y
5)
Coupon = 0.10 * 1000 = 100
Annual required rate = 14%
Keys to use in a financial calculator:
FV 1000
PMT 100
N 10
PV -791.36
CPT /Y
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