Question

A bond your company issued has par of $1000 and matures in 6 years. It pays...

A bond your company issued has par of $1000 and matures in 6 years. It pays annual coupons of $40 each. Annual interest rates are now 3%.1. What is the value of the bond?2. Premium bond or discount bond?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. We can use financial calculator for calculation of value of the bond with below key strokes:

N = maturity = 6; I/Y = market interest rate = 3%; PMT = annual coupons = $40; FV = par value = $1,000 > CPT = compute > PV = value of the bond = $1,054.17

calculator will show PV as negative value because it's a cash outflow.

the value of the bond is $1,054.17.

2. It's a Premium bond because value of the bond $1,054.17 is higher than its par value of $1,000.

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
A bond that matures in 12 years has a par value of $1000 and an annual...
A bond that matures in 12 years has a par value of $1000 and an annual coupon rate of 10%. The market interest rate is 8%. What is its price? Is it a premium or discount bond?
A $1000 par value bond has a coupon rate of 7.7%, pays interest semi-annually, matures in...
A $1000 par value bond has a coupon rate of 7.7%, pays interest semi-annually, matures in 22 years, and is priced at a 82.97 discount from par value. What is the annual yield to maturity of this bond? (Answer to the nearest one hundedth of a percent, i.e., 1.23 but do not include the % sign).
A $1000 bond with coupons at 6%, convertible semiannually, matures at par in 10 years. The...
A $1000 bond with coupons at 6%, convertible semiannually, matures at par in 10 years. The bond is sold in 22 months with an annual yield to maturity of 8%. Find the sale price assuming simple interest between coupon payments.
a coupom bond that pays interest of $60 annually and has a par value of $1000,...
a coupom bond that pays interest of $60 annually and has a par value of $1000, matures in 5years and is selling today at an $84.52 discount from par value. what is thr present value? a coupon bond that pays interest semi- annually has a par value of $1000, matures in 8years and has a yield to maturity of 6%. If the coupon rate is 7% the intrinstic value of the bond today will be?
"A coupon bond that pays interest annually has a par value of $1000, matures in 5...
"A coupon bond that pays interest annually has a par value of $1000, matures in 5 years, and has a yield to maturity of 6%. If the coupon rate is 10%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."
•Company Z has issued bonds with a par value of $1000, 20 years to maturity, and...
•Company Z has issued bonds with a par value of $1000, 20 years to maturity, and a coupon rate of 4%. The bond makes semiannual payments. The yield to maturity (YTM) is 6% per annum. •What is the current price of the bond? •What is the effective annual yield on this bond? •Is this a discount or a premium bond? Discuss. •If the market interest rate increases, what happens to this bond price. Discuss. •If this bond would sell at...
Bond A with a $1000$1000 par value pays coupons semi-annually at 4.44.4% and matures in 55...
Bond A with a $1000$1000 par value pays coupons semi-annually at 4.44.4% and matures in 55 years and 44 months. Bond B is a zero coupon bond with the same face value, time to maturity, and similar risk as Bond A and trades at $$788788. What is the dirty (or actual) price of Bond A, the coupon paying bond? $$ (Give answer to 2 decimal places)
"A coupon bond that pays interest quarterly has a par value of $1000, matures in 5...
"A coupon bond that pays interest quarterly has a par value of $1000, matures in 5 years, and has a yield to maturity of 16%. If the coupon rate is 10%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."
A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years,...
A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 8%, and has a yield to maturity of 7%. 1) Calculate the price of the bond and the Current Yield. 2)   The Macaulay Duration for this bond is 8.29 years, then what is the Modified Duration? 3) Suppose you sell the bond at $1000 two years later. The reinvestment return during these two years is 6%. What is the...
A bond has a coupon rate of 4.6% and pays coupons semi-annually. The bond matures in...
A bond has a coupon rate of 4.6% and pays coupons semi-annually. The bond matures in 5 years and the yield to maturity on similar bonds is 2%. Is this a par, premium or discount bond? What is the price of the bond?   What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond Coupon Rate Yield Price Quote t Apple B ? 3.7% 99.09 21
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT