You have a $1,000 face value bond. You know that it originally had a maturity of 14 years, one year ago. This bond has 7.9% annual rate coupons, that are paid twice a year. The market for bonds like this has a YTM of 5.6% What is the current price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 12.34.) Current bond price

You have a $1,000 face value bond. You know that it originally had a maturity of 14 years, one year ago. This bond has 7.9% annual rate coupons, that are paid twice a year. The market for bonds like this has a YTM of 5.6% What is the current price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 12.34.) Current bond price

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 5MC: What would be the value of the bond described in Part d if, just after it had been issued, the...

See similar textbooks

Similar questions

What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)
Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.
A bond with a face value of $1,000 has 10 years until maturity, has a coupon rate of 5.2%, and sells for $1,105. a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) c. What is the yield to maturity if interest is paid semiannually? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.)
You have a $1,000 face value bond. You know that it originally had a maturity of 15 years, one year ago. This bond has 6.6% annual rate coupons, that are paid twice a year. The market for bonds like this has a YTM of 5.5% What is the current price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 12.34.)
Bond X is a premium bon making annual payments. The bond pays 8% coupon, has YTM of 6% and has 13 years to maturity. Bond Y is a discount bond making annual payments. This bond pays a 6% coupon, has an YTM of 8% and also has 13 years to maturity. The nominal value of both bonds is £1,000. What are the prices of these bonds today? If interest rates remain unchanged, what do you expect the prices of these bonds to be in one year? In three years? In eight years? In twelve, thirteen years? What is going on here? Illustrate your answers by graphing bond prices versus time to maturity.
A General Power bond carries a coupon rate of 8.2%, has 9 years until maturity, and sells at a yield to maturity of 7.2%. (Assume annual interest payments.) a. What interest payments do bondholders receive each year? b. At what price does the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What will happen to the bond price if the yield to maturity falls to 6.2%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. If the yield to maturity falls to 6.2%, will the current yield be less, or more, than the yield to maturity?
Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Price $983.78 865.89 797.92 732.00 660.24 Required: a. Calculate the forward rate of interest for each year. b. How could you construct a 1-year forward loan beginning in year 3? c. How could you construct a 1-year forward loan beginning in year 4?
As with most bonds, consider a bond with a face value of $1,000. The bond's maturity is 25 years, the coupon rate is 9% paid annually, and the discount rate is 3%. What is the bond's Current Yield? Enter your answer as a percentage, without the "%' sign, and rounded to one decimal. For example, if your answer is 0.031416, which is equivalent to 3.1416%, just enter 3.1
You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 6%, maturity is 20 years and the yield to maturity for the bond is currently 8%. a. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary to answer this part of the question.) b. Calculate what the bond price would be in one year if its yield to maturity stays at 8%. c. Find the before-tax holding-period return for a one-year investment period if the bond sells at a yield to maturity of 7% by the end of the year (year 1). d. Suppose that the ordinary income tax rate is 40% and the capital gains tax rate is 30%. When the ordinary income tax rate is higher than the capital gains tax rate, tax authorities typically tax anticipated price appreciations from bonds at the higher ordinary income rate in order to prevent tax aversion with discount bonds. Suppose that from the total dollar…
A General Power bond carries a coupon rate of 9.2%, has 9 years until maturity, and sells at a yield to maturity of 8.2%. (Assume annual interest payments.) a. What interest payments do bondholders receive each year? b. At what price does the bond sell? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. What will happen to the bond price if the yield to maturity falls to 7.2%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. A a. Interest payments b. Price c. Price will by
There is a goverment bond that pays %16 annual coupon interest however the payments are semi-annually. The maturity of this bond is 6 years and the par value is 100 TL. Find the price of this bond when market interest rate is %12 ? Explain briefly the relationship between bond prices and bond yields?