Question

In: Finance

A bond has a 11% coupon rate with semi-annual coupons and matures in 9 years. The...

A bond has a 11% coupon rate with semi-annual coupons and matures in 9 years. The bond has a $1,000 face value and a current yield of 14.37%.

What is the bond's price?

What is the bond's yield to maturity? Enter your answer as a decimal.

Solutions

Expert Solution

a. Bond's Price $ 765.48
Working;
# 1 Annual coupon payment = Face value * Coupon rate
= $ 1,000.00 * 11%
= $     110.00
# 2 Bond's Price = Annual coupon payment / current yield
= $     110.00 / 14.37%
= $     765.48
b. Yield to maturity      0.1601
Working;
Yield to maturity = =rate(nper,pmt,-pv,fv)*2
=         0.1601
Where,
nper Number of period = 18
pmt Coupon payment = $       55.00
pv Current price = $     765.48
fv Face value = $ 1,000.00

Related Solutions

Jack is planning to buy a 9-year bond with semi-annual coupons and a coupon rate of...
Jack is planning to buy a 9-year bond with semi-annual coupons and a coupon rate of 6.9 percent p.a. The face value is $1,000. Given an annual yield of 5.4 percent, what is the bond’s current price? (to the nearest cent)?
Suppose a bond with the 8.5% coupon rate in a semi annual coupons has a face...
Suppose a bond with the 8.5% coupon rate in a semi annual coupons has a face value of a $1000 , 10 years to maturity and is selling for $1685.82 what’s the yield to maturity?
What is the value of a bond that matures in 9 years, has an annual coupon...
What is the value of a bond that matures in 9 years, has an annual coupon payment of $90, and has a par value of $1000? Assume a required rate of return of 6%, and round your answer to the nearest $10.
Suppose a bond with a 3% coupon rate and semi annual coupons, has a face value...
Suppose a bond with a 3% coupon rate and semi annual coupons, has a face value of $1000.30 years of two maturity and selling for $945.82. What is the yield to maturity?
Consider a bond that pays a 10.00% semi-annual coupon and matures in 10 years. If the...
Consider a bond that pays a 10.00% semi-annual coupon and matures in 10 years. If the current market value of the bond is $1,200, what is the YTM?
Problem A, A bond matures in 26 years, has an annual coupon rate of 8% on...
Problem A, A bond matures in 26 years, has an annual coupon rate of 8% on a face of $1000, yields an annual rate of 10%, and its first annual coupon will be paid a year from now. The following information applies to the above bond:       YTM                                 $-Price       10.2%                              801.5761       10.0%   (presently)   P0 = 816.7811         9.8%                              832.4845 At the present price (P=816.7811), the annualized Modified Duration is a. 19.02 b. 19.98 c. 9.46 d. 9.51 At the present price (P0), the measure of...
A $1,000 par value bond has a 9% annual coupon and matures in 5.50 years. If...
A $1,000 par value bond has a 9% annual coupon and matures in 5.50 years. If the current market interest rate on bonds of this type is 7% p.a., calculate this bond’s invoice price, accrued interest, and clean price.
9. A bond matures in 12 years and pays a 6 percent annual coupon. The bond...
9. A bond matures in 12 years and pays a 6 percent annual coupon. The bond has a face value of $1,000 and currently sells for $890. What is the bond’s current yield and yield to maturity? 10. The face value for Karen’s Limited bonds is $100,000 and has a 2 percent annual coupon. The 2 percent annual coupon bonds matures in 2022, and it is now 2012. Interest on these bonds is paid annually on December 31 of each...
A $100 bond with 4% coupon rate matures in 25 years. It bears semiannual coupons and...
A $100 bond with 4% coupon rate matures in 25 years. It bears semiannual coupons and is purchased for $117.50 to yield i(2). A $100 bond with 5% coupon rate also matures in 25 years. It also bears semiannual coupons, but is purchased for $135.00 to yield i(2). What is i(2)? Less than 1.75% At least 1.75%, but less than 2.25% At least 2.25%, but less than 2.75% At least 2.75%, but less than 3.25% 3.25% or more
A bond that matures in 15 years has a ​$1,000par value. The annual coupon interest rate...
A bond that matures in 15 years has a ​$1,000par value. The annual coupon interest rate is 12 percent and the​ market's required yield to maturity on a​comparable-risk bond is 14 percent. What would be the value of this bond if it paid interest​ annually? What would be the value of this bond if it paid interest​ semiannually?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT