Question

P&G Manufacturing just issued a bond with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 30 years, pays annual coupons, and the yield to maturity is 6.8%, what will the bond sell for?

A.
$1,000,00

B.
$1,087.25

C.
$975.18

D.
$1,025.32

E.
$1,111.81

Answer #1

Answer- **D. $1025.32**

**Calculation of
the Price of the bond**

Price of bond = Present value of cashflows

Present Value of cashflows= Present value Principal + Present value interests

Present value of principal = $1000 x Presen value factor at 6.8% for 30 years = $1000 x (1/[1.068^30]) = $1000x013895 = $138.95

Annual interest = $1000 x 7% = $70

Present value of annual interest payments = Annual interest x Annuity factor at 6.80% for 30 years

=$70 x ( [1- [1/1.068^30] ] / 0.068) = $70 x 12.6624 = $886.368

Price of bond = $138.95 + $886.37 =
**$1025.32**

J&J Manufacturing just issued a bond with a $1,000 face
value and a coupon rate of 7%. If the bond has
a life of 20 years, pays semi-annual coupons, and the yield to
maturity is 7.5%, what is the value
of the bond? (948.62)
Answer provided. Please explain and how to do it.

Acme Inc. just issued a bond with a $10,000 face value and a
coupon rate of 7%. If the bond has a life of 30 years, pays
semi−annual coupons, and the yield to maturity is 9%, what will
the bond sell for?

Just-Buss Corporation has issued a bond that has a 10% coupon
rate, payable quarterly. The bonds mature in 10 years, have a face
value of $1,000 and a yield to maturity of 12%. What is the price
of the bond?
What must be the price of a $10,000 bond with a 12% coupon rate,
semi-annual coupons, and five years to maturity if it has a yield
to maturity of 10%?

bond has $1,000 face value, 25 years to maturity, 3.6% annual
coupon rate. The bond’s current price is $948.92. Assuming the bond
pays coupons semiannually, what is the bond’s yield to maturity
(YTM)?

Oceanic Cruises Inc. has just issued a 5-year bond. The face
value of the bond is 1,000 €. The bond is based in Europe and pays
coupons annually; being the annualized coupon yield (=coupon rate)
6.6%. The current market interest rate for the bond (YTM) is 6% in
annual terms. Please, find the fair value for the bond:

Bond E has the following features: Face value = $1,000, Coupon
Rate = 7%, Maturity = 5 years, Yearly coupons The market interest
rate is 3.09% If interest rate remains at 3.09% for the life of the
bond (i.e., 3.09 years), what is the price of Bond E in year 2?

1. A $1,000 face value bond of Acme Inc. pays an annual coupon
and carries a coupon rate of 8.25%. It was a 30 year bond when
issued and it has 11 years remaining to maturity. If it currently
has a yield to maturity of 5.75%.
(a) What interest payments do bondholders receive each year?
(b) What is the current bond price?
(c) What is the bond price if the yield to maturity rises to
7.625%?

A 10-year bond has a face value of $1,000 with a 5% per annum
coupon rate. The bond pays coupons semi-annually. The current yield
to maturity of the bond is 4% per annum. After 5 years, the yield
to maturity of the bond is predicted to increase to 6% per annum,
what would be the value of the bond in Year 5?

Consider the following bond issued by
Walmart: coupon rate: 4.828% face value: $1,000 maturity date:
July 15, 2040 semi-annual coupons settlement date: March 8, 2020
yield (YTM): 4.164% most recent coupon payment date: January 15,
2020
What is the value of the bond? (Equivalently, we are calculating
the “dirty price”.) Express your answer as the dollar and cents
price for a bond with $1,000 face value.

An Australian Government bond with a face value of $1,000 and an
annual coupon rate of 5.5% matures in seven years, pays interest
semi-annually, and has a yield to maturity of 6.2%. What is the
price of the bond right after it makes its first coupon
payment?
a. $947.21
b. $960.73
c. $945.08
d. $963.01

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