Question

5- Bond A has the following features:          Face value = $1,000,        Coupon Rate = 8%,       ...

5- Bond A has the following features:

         Face value = $1,000,       

Coupon Rate = 8%,       

Maturity = 9 years, Yearly coupons

         The market interest rate is 5.05%

         If interest rates remain at 5.05%, what will the price of bond A be in year 1?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Face/Par Value of bond = $1000

Annual Coupon Bond = $1000*8%

= $80

No of years to maturity left in Year 1(n) = 9 years - 1 years = 8 years

Market interest rates(YTM) remain at = 5.05%

Calculating the Market price of Bond:-

Price = $516.014 + $674.266

Price = $1190.28

So, the price of bond A be in year 1 is $1190.28

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
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 8%,        Maturity...
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 8%,        Maturity = 10 years, Yearly coupons          The market interest rate is 4.84%          If interest rates remain at 4.84%, what will the price of bond A be in year 1?
Bond A has the following features: Face value = $1,000, Coupon Rate = 5%, Maturity =...
Bond A has the following features: Face value = $1,000, Coupon Rate = 5%, Maturity = 9 years, Yearly coupons The market interest rate is 7.92% If interest rates remain at 7.92%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1? State your answer to 2 decimal places (e.g., 3.56, 0.29) If there is a capital loss make sure to include a negative sign in your answer (e.g., -0.23).
Bond E has the following features:          Face value = $1,000,        Coupon Rate = 9%,         Maturity...
Bond E has the following features:          Face value = $1,000,        Coupon Rate = 9%,         Maturity = 5 years, Yearly coupons          The market interest rate is 3.47% If interest rate remains at 3.47% for the life of the bond (i.e., 3.47 years), what is the price of Bond E in year 2?
       Bond E has the following features:          Face value = $1,000,        Coupon Rate = 4%,        ...
       Bond E has the following features:          Face value = $1,000,        Coupon Rate = 4%,         Maturity = 5 years, Yearly coupons          The market interest rate is 3.55% If interest rate remains at 3.55% for the life of the bond (i.e., 3.55 years), what is the price of Bond E in year 4?
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 5%,        Maturity...
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 5%,        Maturity = 10 years, Yearly coupons          The market interest rate is 6.30% What is the current yield for bond A from today to year 1? Calculate your answer to 2 decimal places (e.g., 5.23)
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 9%,        Maturity...
Bond A has the following features:          Face value = $1,000,        Coupon Rate = 9%,        Maturity = 6 years, Yearly coupons          The market interest rate is 5.34% If interest rates remain at 5.34%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1? State your answer to 2 decimal places (e.g., 3.56, 0.29) If there is a capital loss make sure to include a negative sign in your answer (e.g.,...
Bond A has the following features: Face value = $1,000, Coupon Rate = 10%, Maturity =...
Bond A has the following features: Face value = $1,000, Coupon Rate = 10%, Maturity = 9 years, Yearly coupons The market interest rate is 3.41% If interest rates remain at 3.41%, what is the percentage capital gain or loss on bond A if you sell the bond in year 1? State your answer to 2 decimal places (e.g., 3.56, 0.29) If there is a capital loss make sure to include a negative sign in your answer (e.g., -0.23)
3- Bond A has the following features:          Face value = $1,000,        Coupon Rate = 4%,       ...
3- Bond A has the following features:          Face value = $1,000,        Coupon Rate = 4%,        Maturity = 10 years, Yearly coupons          The market interest rate is 4.6% What is today’s price of bond A?
Bond E has the following features: Face value = $1,000, Coupon Rate = 7%, Maturity =...
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. Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate...
1. Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 5% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 4.50% Immediately after you buy the bond the interest rate changes to 6.71% What is the "reinvestment" effect in year 3 ? 2.       Bond E has the following features:          Face value = $1,000,        Coupon Rate = 10%,         Maturity = 5 years, Yearly coupons         ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT