Question

You have a 2.250% $8,000 bond maturing August 14, 2025. You purchase the bond to settle...

You have a 2.250% $8,000 bond maturing August 14, 2025.

You purchase the bond to settle August 14, 2024 when yields are 8.250%

The purchase price of this bond is thus:

Round to 4 decimal points with work

Homework Answers

Answer #1

Assuming that the coupons are paid annually, the price of the bond can be calculated by using the formula:

Where C denotes the coupon amount;

r denotes the yield;

n denotes the maturity period

It can also be calculated using the Price function in MS -Excel:

Thus, the price of the bond is $ 7,392.3788

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You consider buying a semi-annual corporate bond maturing on December 16, 2024 and settling on August...
You consider buying a semi-annual corporate bond maturing on December 16, 2024 and settling on August 26, 2020. The bond is based on Actual/365 day-count method with a coupon rate of 6% redeemable at 100% of par value. The bond yields 7%. Compute the bond’s price and accrued interest? Solution = PRI = $96.32; AI = $1.16
Consider a coporate bond maturing on April 14, 2025 witha. coupon rate of 5% and yield...
Consider a coporate bond maturing on April 14, 2025 witha. coupon rate of 5% and yield of 6%. What is the clean price of the bond on July 23, 2018? a. 945.22 b. 946.13 c. 958.88 d. 1,000.00 i know the answer is A. I want to know how and why it is that answer. I dont know how to solve? I am using BA II PLUS and TI-84 Plus
You have a $22,000 semi-annual 1.000% bond maturing in exactly 18 years. If it is priced...
You have a $22,000 semi-annual 1.000% bond maturing in exactly 18 years. If it is priced to yield 8.250% then the bond has a market value of $ XXX and the income yield is XXX%
Suppose you purchase a zero-coupon bond with a face value $1,000, maturing in 16 years, for...
Suppose you purchase a zero-coupon bond with a face value $1,000, maturing in 16 years, for $670. If the yield to maturity on the bond remains unchanged, what will be the price of the bond 5 years from now? Question 15 options: $759 $778 $797 $816 $835
A $5000 bond maturing at 103 on 10/1/2008 had semiannual coupons at 6%. Find the purchase...
A $5000 bond maturing at 103 on 10/1/2008 had semiannual coupons at 6%. Find the purchase price on 4/1/2001 to yield 6.2% compounded semiannually. Assume that the above bond was sold on 6/22/2005. At what price must it have been sold to yield the buyer the same 6.2%?
When you buy a bond, the date of purchase (the settlement date) is often between two...
When you buy a bond, the date of purchase (the settlement date) is often between two coupon payment dates. In this situation, the price you pay (the invoice price) is the sum of the flat price and the accrued interest. Invoice price = Flat price + Accrued Interest For a semi-annual payment coupon bond, the accrued interest In this exercise, you compute the invoice price of a $1000 par value, 5% semi-annual payment coupon bond maturing on 30th June 2025...
Suppose you purchase a zero coupon bond with a face value of ​$1,000​, maturing in 21...
Suppose you purchase a zero coupon bond with a face value of ​$1,000​, maturing in 21 ​years, for ​$215.00. Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the​ bond's life? The implicit interest in the first year of the​ bond's life is ?  ​(Round to the nearest​ cent.)
Suppose you purchase a zero coupon bond with a face value of $1,000, maturing in 20...
Suppose you purchase a zero coupon bond with a face value of $1,000, maturing in 20 years, for $214.55. Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the bond's life? The implicit interest in the first year of the bond's life is _________. (Round to the nearest cent.)
a) Consider the following, a AAA rated Treasury bond with a face value of $1000, maturing...
a) Consider the following, a AAA rated Treasury bond with a face value of $1000, maturing in 20 years and paying 14.00 per cent per annum coupons semi-annually. If current market yields for this type of security are 12.00 per cent per annum, what price would you pay for the instrument?   b) What will happen to the price of the bond if yields adjust from 12.00 to 10.00 percent per annum? c) Consider now the bonds noted above in (a)...
28.You purchase a Chrysler bond with a par value of $1,000 that carries a semi-annual coupon...
28.You purchase a Chrysler bond with a par value of $1,000 that carries a semi-annual coupon rate of 4%, has a 5-year maturity and sells at par. (7 points) a.What will be the bond’s price one year later if the YTM has decreased by 1%? b.If you sell the bond at the price (a) above, what was is your HPR (Holding Period Return)? Round your answer to two (2) decimal places. 29.The Nickelodeon Manufacturing Corp. has a series of $1,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT