Question

What is the intrinsic value to you of a 10 percent coupon bond with a par...

What is the intrinsic value to you of a 10 percent coupon bond with a par value of $20,000, that matures in 20 years, if you require an 8 percent return? Use semiannual compounding. Show your calculations.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The price of bond is calulcated by finding the present value of all the cash flows i.e. the coupon payments and the face value. The price is $ 23,958.55

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
8) Assume that a bond has a coupon rate of 10 percent, makes annual coupon payments,...
8) Assume that a bond has a coupon rate of 10 percent, makes annual coupon payments, and has a par value of $1,000. Calculate the bond’s value under the following conditions. The bond matures in 5 years and the YTM is 5%: The bond matures in 5 years and the YTM is 10%: The bond matures in 5 years and the YTM is 15%: The bond matures in 15 years and the YTM is 5%: The bond matures in 15...
A coupon bond has an 8% coupon rate and has a par value of $1,000, matures...
A coupon bond has an 8% coupon rate and has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. What will be the intrinsic value of the bond today if the coupon rate is 8%?
1. What is the value of a $1,000 par value bond that has a 10% annual...
1. What is the value of a $1,000 par value bond that has a 10% annual coupon, and has ten years until maturity if the required rate of return (rd) is 8%. 2. What is the value of a $1,000 par value bond with a 8% coupon, paid semi-annually, which has 10 years until maturity and a required rate return of 12%. 3. What is the value of a zero coupon bond which matures in 20 years if the required...
A bond has a par value of $1000 and a coupon rate of 9.5%. The bond...
A bond has a par value of $1000 and a coupon rate of 9.5%. The bond matures in 7 years. What is the value of the bond if similar bonds yield 4%? This bond makes semiannual payments. Can you show how to input it in a financial calculator.
You purchased a bond for $ 1,100. The bond has a coupon rate of 8 ​percent,...
You purchased a bond for $ 1,100. The bond has a coupon rate of 8 ​percent, which is paid semiannually. It matures in 7 years and has a par value of $1,000. What is your expected rate of​ return?
A 25-year, $1,000 par value zero-coupon rate bond is to be issued to yield 8 percent....
A 25-year, $1,000 par value zero-coupon rate bond is to be issued to yield 8 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. What should be the initial price of the bond? (Assume annual compounding. Do not round intermediate calculations and round your answer to 2 decimal places.) b. If immediately upon issue, interest rates dropped to 7 percent, what would be the value of the zero-coupon...
You purchased a bond for $925 The bond has a coupon rate of 8 ​percent, which...
You purchased a bond for $925 The bond has a coupon rate of 8 ​percent, which is paid semiannually. It matures in 14 years and has a par value of 1000 . What is your expected rate of​ return? Your expected rate of return is ?
What is the value of a bond that has a par value of $1,000, a coupon...
What is the value of a bond that has a par value of $1,000, a coupon rate of 8.85 percent (paid annually), and that matures in 10 years? Assume a required rate of return on this bond is 9.02 percent. Fresh Water, Inc. sold an issue of 13-year $1,000 par value bonds to the public. The bonds have a 8.17 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc. bonds is...
1, You own a bond that pays $60 in annual interest, with a $1,000 par value....
1, You own a bond that pays $60 in annual interest, with a $1,000 par value. It matures in 20 years. Your required rate of return is 6 percent. a, Value of bond = ?? b, If you required rate of return increases to 10%, what is the value of bond? c, If you required rate of return decreases to 4% , what is the value of bond? d, Assume that the bond matures in 3 years instead of 20...
What is the value of a bond that has a par value of $1,000, a coupon...
What is the value of a bond that has a par value of $1,000, a coupon rate of 10.86 percent (paid annually), and that matures in 14 years? Assume a required rate of return on this bond is 9.65 percent. How do I do this in Excel?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT