Question

A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...

A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values:

RATE

NPER

PMT

FV

TYPE

Repeat problem , but with annual coupon payments.

RATE

NPER

PMT

FV

TYPE

Homework Answers

Answer #1

Face value of the bond = 1000

Annual coupon rate = 8%

Annual coupon payment = Annual coupon rate*Face Value = 8%*1000 = 80

Time to maturity =10 years

Yield to maturity = 9%

Semi-annual coupon payments

For semi-annual coupon payments, we will consider semi-annual coupons, semi-annual YTM, and semi-annual periods to maturity

Semi-annual coupon payments = PMT = Annual coupon payments/2 = 80/2 = 40

semi-annual YTM = RATE = 9%/2 = 4.5%

No. of semiannual periods = NPER = 10*2 = 20

Face Value = FV = 1000

RATE = 4.5%

NPER = 20

PMT = 40

FV = 1000

TYPE = 0

=PV(4.5%,20,40,1000) = -934.96

Price of the bond with semiannual coupons = $934.96

Annual coupon payments

Yield to maturity = RATE = 9%

Time to maturity = NPER = 10 years

Annual coupon payments = PMT = 80

Face value = FV = 1000

RATE = 9%

NPER = 10

PMT = 80

FV = 1000

TYPE = 0

=PV(9%,10,80,1000) = -935.82

Price of the bond with annual coupons = $935.82

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
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values: RATE NPER PMT FV TYPE
A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 8.1%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the bond’s yield to maturity if the bond is selling for $910? b. What is the bond’s yield to maturity if the bond is selling for $1,000? c. What is the bond’s yield to maturity if the bond is selling for...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 8.8%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the bond’s yield to maturity if the bond is selling for $980? b. What is the bond’s yield to maturity if the bond is selling for $1,000? c. What is the bond’s yield to maturity if the bond is selling for...
1.). Co.has 7% coupon rate bonds, 9-year maturity. Payments are annual. Face value is $1,000. If...
1.). Co.has 7% coupon rate bonds, 9-year maturity. Payments are annual. Face value is $1,000. If the price=$1,038.50, what's the YTM? Note that PMT and FV have the same sign, while PV has the opposite sign in Excel. See the practice. (Round your answer to 2 decimal places
bond has $1,000 face value, 25 years to maturity, 3.6% annual coupon rate. The bond’s current...
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)?
On 10/12/2020, a U.S. Treasury bond has a face value $1,000, maturity at 8/10/2022, a coupon...
On 10/12/2020, a U.S. Treasury bond has a face value $1,000, maturity at 8/10/2022, a coupon rate of 7.2%, semi-annual coupon payments, and yield to maturity (BEY) of 5.6%. As of 10/12/2020, there have been 63 days since the last coupon payment. There are 184 days between 8/10/2020 and 2/10/2021. What are the bond’s clean price and dirty price? Keep the final answers in 2 decimal places, e.g., $10.12.
What is the fair value of a $1,000 face value, fixed coupon bond with a coupon...
What is the fair value of a $1,000 face value, fixed coupon bond with a coupon rate of 3.4%, yield-to-maturity of 3.7%, semi-annual coupon payments and 8 years to maturity? Group of answer choices
A bond has $1,000 face value, coupon rate of 3.5%, and yield to maturity (YTM) of...
A bond has $1,000 face value, coupon rate of 3.5%, and yield to maturity (YTM) of 3.7%. It will mature in 16 years and the interest rate will compound annually. What is this bond’s current yield?
A company has outstanding bonds with a $ 1,000 par value, a 7% coupon with semiannual...
A company has outstanding bonds with a $ 1,000 par value, a 7% coupon with semiannual payments. What is the bond’s price if there are 9 years to maturity, and the yield to maturity is 9%? N= I= PV= PMT= FV=
a 10-year bond, $1,000 face value bond with a 8% coupon rate and semi-annual coupons has...
a 10-year bond, $1,000 face value bond with a 8% coupon rate and semi-annual coupons has a yield to maturity of 12%. the bond should be trading at the price of? round to nearest cent