You have a bond with a 5% coupon, 10 years to maturity and a Yield to...

You have a bond with a 5% coupon, 10 years to maturity and a Yield to Maturity of 4.75%. What is the dollar value of the bond?

Expert Solution

Dollar Value of the Bond

The Price of the Bond is the Present Value of the Coupon Payments plus the Present Value of the face Value

Face Value of the bond = $1,000

Annual Coupon Amount = $50 [$1,000 x 5%]

Yield to Maturity of the Bond = 4.75%

Maturity Period = 10 Years

The Price of the Bond = Present Value of the Coupon Payments + Present Value of the face Value

= $50[PVIFA 4.75%, 10 Years] + $1,000[PVIF 4.75%, 10 Years]

= [$50 x 7.81635] + [$1,000 x 0.62872]

= $390.82 + $628.72

= $1,019.54

“Hence, the Dollar Value of the Bond will be $1,019.54”

NOTE

-The formula for calculating the Present Value Annuity Inflow Factor (PVIFA) is [{1 - (1 / (1 + r)ⁿ} / r], where “r” is the Yield to Maturity of the Bond and “n” is the number of maturity periods of the Bond.

-The formula for calculating the Present Value Inflow Factor (PVIF) is [1 / (1 + r)ⁿ], where “r” is the Yield to Maturity of the Bond and “n” is the number of maturity periods of the Bond.

jeff jeffy answered 11 months ago

Assume you own a bond with a 5% coupon, a 6% yield-to-maturity, 5 years to maturity,...

Assume you own a bond with a 5% coupon, a 6% yield-to-maturity, 5 years to maturity, and a $1,000 par value. It is currently priced at $957.35. If the yield-to-maturity increases to 8.0%, what is the price of the bond? Select one: a. $1,043.76 b. $878.33 c. $1,000 d. $1,087.52

You buy a 6% annual coupon bond, with 10-years to maturity, when its yield to maturity...

You buy a 6% annual coupon bond, with 10-years to maturity, when its yield to maturity is 5%. One year later, the yield to maturity is 6%. What is your return over the year?

Find the convexity of a 10-year maturity, 5% coupon bond selling at a yield to maturity...

Find the convexity of a 10-year maturity, 5% coupon bond selling at a yield to maturity of 6%. the bond pays its coupons annually.

You have just purchased a 10-year zero-coupon bond with a yield to maturity of 10% and...

You have just purchased a 10-year zero-coupon bond with a yield to maturity of 10% and a par value of $1,000. What would the rate of return on your investment at the end of the year be if you sold the bond? Assume the yield to maturity on the bond is 11% at the time you sell. A) 10.00% B) 20.42% C) 13.85% D) 1.4% 2. Consider a 5-year bond with a 7% coupon and a yield to maturity of...

A $1,000 par bond with a 12.25% coupon has 10 years to maturity. If the yield...

A $1,000 par bond with a 12.25% coupon has 10 years to maturity. If the yield to maturity is 12.25%, what is the price of the bond? $1,138.25 $1,047.92 $1,000.00 $889.20

You own a 10-year bond paying an annual coupon rate of 5%. The yield to maturity...

You own a 10-year bond paying an annual coupon rate of 5%. The yield to maturity on the bond is 7%. The face value, as usual, is $1000. What is the value of the bond today?

A zero-coupon bond has 9 years to maturity and a yield of 5%. What is the...

A zero-coupon bond has 9 years to maturity and a yield of 5%. What is the value of the bond?

A U.S. government bond with 5 years to maturity pays a coupon of 3.5%. The yield...

A U.S. government bond with 5 years to maturity pays a coupon of 3.5%. The yield to maturity is 2.8%. Use Excel or Python to produce a graph of the bond price as a function of different yields to maturity. Carla earns $100,000 per year now, and pays $20,000 per year on her fixed rate mortgage. Her income is subject to a COLA clause. If the risk-free rate of interest is 3%, and the expected inflation rate is 2% per...

Consider a bond with a 10% coupon and with yield to maturity = 8%. If the...

Consider a bond with a 10% coupon and with yield to maturity = 8%. If the bond’s YTM remains constant, then in one year, will the bond price be higher, lower, or unchanged? Please explain your answer and give examples to help demonstrate your explanation.

Consider a 5- year bond with a semi-annual 10% coupon and a yield to maturity(ytm) of...

Consider a 5- year bond with a semi-annual 10% coupon and a yield to maturity(ytm) of 9.00%. what is the duration of this bond in years?

Question