Question

a friend of yours just invested in an outstanding bond with a 6% annual coupon and...

a friend of yours just invested in an outstanding bond with a 6% annual coupon and a remaining maturity of 15 years. The bond has a par value of $1,000 and the market interest rate is currently 8%. How much did your friend pay for the bond?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Par Value of the Bond $            1,000.00
Annual Coupon rate 6%
Maturity Period 15 Year
Marker interest Rate 8%
Coupon Payment $                  60.00
Principal Payment $            1,000.00
Discount rate 8%
Value of Bond Present Value of Coupon ayment + Present Value of Principal
$               513.50 $        315.24
Value of Bond $               828.74
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Your college roommate invested in a bond with a 7% annual coupon with a maturity of...
Your college roommate invested in a bond with a 7% annual coupon with a maturity of ten years. The bond has a par value of $1,000. The current market interest rate is 8.5%. How much did he/she pay for the bond? b. $903.34 b. $889.52 c. $901.58 d. $945.02 e. $1,014.62
NO NEED FOR EXPLANATION 14. Your brother has just invested in a discount bond that offers...
NO NEED FOR EXPLANATION 14. Your brother has just invested in a discount bond that offers an annual coupon rate of 9%, with interest paid annually. The face value of the bond is $1,000 and the difference between its yield to maturity and coupon rate is 4%. The bond matures in 8 years. What is the bond’s price? * a. $808.05 b. $990.50 c. $750 d. $550 e. None of the above 13. Mining Fund has purchased a bond with...
1) how much should you pay for a $1000 bond with 6% coupon, annual payments, and...
1) how much should you pay for a $1000 bond with 6% coupon, annual payments, and 16 years to maturity if the interested rate is 6%? 2) how much should you pay for a $1000 zero coupon bond with 5 years to maturity if the interest rate is 5%? 3) what is the rate of return for an investor who pays $1061 for a 3 year bond with an annual coupon payment of 6% and sells the bond 1 year...
1. ABC Corp. has a bond issue outstanding with an annual coupon of 6%, made in...
1. ABC Corp. has a bond issue outstanding with an annual coupon of 6%, made in annual payments, and 5 years remaining until maturity. The par value of the bond is $1000. Determine the current value of the bond if present market conditions justify a 12% yield. (10 points) 2. ABC Corp. has a bond issue outstanding with an annual coupon of 6%, made in semi-annual payments, and 7 years remaining until maturity. The par value of the bond is...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 7.2%, what is the value of the bond? Do not round intermediate calculations. Round your answer to the nearest cent. $   Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 9%, what is the value of the bond? Do not round intermediate calculations. Round your answer to the nearest cent. $   Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and...
Quantitative Problem: Potter Industries has a bond issue outstanding with an annual coupon of 6% and a 10-year maturity. The par value of the bond is $1,000. If the going annual interest rate is 8.4%, what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. $ Quantitative Problem: Potter Industries has a bond issue outstanding with a 6% coupon rate with semiannual payments of $30, and a 10-year maturity. The par...
1, A $1,000 par value bond with a 6% coupon rate is currently selling for 90....
1, A $1,000 par value bond with a 6% coupon rate is currently selling for 90. This bond has 15 years remaining before it matures. If you purchase this bond today and hold it to maturity, what YTM will you earn? 2, A $1,000 par value bond with a 8% coupon rate is currently selling for 110. This bond has 20 years remaining before it matures. If you purchase this bond today and hold it to maturity, what YTM will...
SHOW ALL WORKS 1. ABC Corp. has a bond issue outstanding with an annual coupon of...
SHOW ALL WORKS 1. ABC Corp. has a bond issue outstanding with an annual coupon of 6%, made in annual payments, and 5 years remaining until maturity. The par value of the bond is $1000. Determine the current value of the bond if present market conditions justify a 12% yield. (10 points) 2. ABC Corp. has a bond issue outstanding with an annual coupon of 6%, made in semi-annual payments, and 7 years remaining until maturity. The par value of...
Milner's Tools has a 9-year, 7 percent annual coupon bond outstanding with a $1,000 par value....
Milner's Tools has a 9-year, 7 percent annual coupon bond outstanding with a $1,000 par value. Carter's Tools has a 10-year, 6 percent annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6.5 percent. If the market yield increases to 6.75 percent, (1) What is the percentage change in Milner’s bond value? (2) What is the percentage change in Carter’s bond value? (3) Whose bond has higher interest rate risk? Why?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT