Question

7. Pam Smith just inherited a $1,000 face value K-S Inc. bond from her grandmother. The...

7. Pam Smith just inherited a $1,000 face value K-S Inc. bond from her grandmother. The bond clearly indicates a 12% coupon rate, but the maturity date has been smudged and can’t be read. Pam called a broker and determined that similar bonds are currently returning about 8% and that her bond is selling for $1326.58. How many more interest payments can Pam expect to receive on her inherited bond?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

- Face Value of Bond = $1000

Semi-annual Coupon Payments = $1000*12%*1/2 = $60

Current price = $1326.58

Semi-annual YTM = 8%/2 = 4%

Calculating the Number of Coupon payments that are left to be paid using Excel "NPER" function:-

So, no of semi-annual Coupon paymnet that will be received are 27

If you need any clarification, you can ask in comments.    

If you like my answer, then please up-vote as it will be motivating       

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
7. Pablo just purchased a bond for $1,024.75. The bond has a face value of $1,000...
7. Pablo just purchased a bond for $1,024.75. The bond has a face value of $1,000 and a 10 percent coupon rate, with coupon interest paid annually. Pablo’s broker told him that the yield to maturity on this bond is 9.5%; however, the broker did not tell him when the bond would mature. Calculate how many years this bond has left until it matures.
A firm has a bond issue with face value of $1,000, a 7% coupon rate, and...
A firm has a bond issue with face value of $1,000, a 7% coupon rate, and nine years to maturity. The bond makes coupon payments every six months and is currently priced at $1,067.89. What is the yield to maturity on this bond
1. A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a...
1. A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a coupon rate of 8.25%. It was a 30 year bond when issued and it has 11 years remaining to maturity. If it currently has a yield to maturity of 5.75%. (a) What interest payments do bondholders receive each year? (b) What is the current bond price? (c) What is the bond price if the yield to maturity rises to 7.625%?
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 6%. Now, with 6 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 11%. What is the price of the bond now? (Assume semiannual coupon payments.) b. Suppose that investors believe that Castles can make good on the promised coupon payments...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 6%. Now, with 6 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 11%. What is the price of the bond now? (Assume semiannual coupon payments.) (Do not round intermediate calculations. Round your answer to 2 decimal places.) Bond Price: b....
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 6.6%. Now, with 6 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 13%. What is the price of the bond now? (Assume semiannual coupon payments.) (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Suppose that...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000...
a. Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 5%. Now, with 5 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 10%. What is the price of the bond now? (Assume semiannual coupon payments.) (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Suppose that...
1. Assume a bond has a face value of $1,000, coupon rate of 7%, maturity of...
1. Assume a bond has a face value of $1,000, coupon rate of 7%, maturity of 9 years, and can currently be purchased in the market at a price of $1,099. The bond can be called after 5 years, and in that case the call premium paid would be $50. Which is bigger, YTM or YTC? Use two decimals in your calculations for your comparison. a.YTM b.YTC c.They are both the same. d.There is not enough information to calculate YTM....
Marie Snell recently inherited some bonds (face value R100 000) from her father, and soon thereafter...
Marie Snell recently inherited some bonds (face value R100 000) from her father, and soon thereafter she became engaged to Sam Spade, a University of Florida marketing graduate. Sam wants Marie to cash in the bonds so the two of them can use the money to "live like royalty" for two years in Monte Carlo. The 2 percent annual coupon bonds mature on January 1, 2024, and it is now January 1, 2004. Interest on these bonds is paid annually...
You just bought a newly issued bond which has a face value of $1,000 and pays...
You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 5%, maturity is 20 years and the yield to maturity for the bond is currently 8%. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary.) 2 marks) Calculate what the bond price would be in one year if its...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT