Question

Doisneau 25​-year bonds have an annual coupon interest of 9 ​percent, make interest payments on a...

Doisneau 25​-year bonds have an annual coupon interest of 9 ​percent, make interest payments on a semiannual​ basis, and have a ​$1 comma 000 par value. If the bonds are trading with a​ market's required yield to maturity of 13 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds?

a. If the bonds are trading with a yield to maturity of 13​%, then ​ (Select the best choice​ below.)

   A. there is not enough information to judge the value of the bonds.

   B. the bonds should be selling at par because the​ bond's coupon rate is equal to the yield to maturity of similar bo   C. the bonds should be selling at a premium because the​ bond's coupon rate is greater than the yield to maturity of similar bonds.

D. the bonds should be selling at a discount because the​ bond's coupon rate is less than the yield to maturity of similar bonds. Your answer is correct.

b.The price of the bonds is ​$ ​ (Round to the nearest​ cent.)

Homework Answers

Answer #1

a

b

                  K = Nx2
Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =25x2
Bond Price =∑ [(9*1000/200)/(1 + 13/200)^k]     +   1000/(1 + 13/200)^25x2
                   k=1
Bond Price = 705.51
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
Doisneau 20​-year bonds have an annual coupon interest of 14 ​percent, make interest payments on a...
Doisneau 20​-year bonds have an annual coupon interest of 14 ​percent, make interest payments on a semiannual​ basis, and have a ​$1 000 par value. If the bonds are trading with a​ market's required yield to maturity of 12 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? a. If the bonds are trading with a yield to maturity of 12​%, then ​ (Select the best choice​ below.) A. the bonds should...
Doisneau 16​-year bonds have an annual coupon interest of 12 ​percent, make interest payments on a...
Doisneau 16​-year bonds have an annual coupon interest of 12 ​percent, make interest payments on a semiannual​ basis, and have a ​$1000 par value. If the bonds are trading with a​ market's required yield to maturity of 17 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? A. the bonds should be selling at par because the​ bond's coupon rate is equal to the yield to maturity of similar bonds. B. there...
Doisneau 19​-year bonds have an annual coupon interest of 8 ​percent, make interest payments on a...
Doisneau 19​-year bonds have an annual coupon interest of 8 ​percent, make interest payments on a semiannual​ basis, and have a ​$1,000 par value. If the bonds are trading with a​ market's required yield to maturity of 17 percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? a. If the bonds are trading with a yield to maturity of 17​%, then ​ (Select the best choice​ below.) A.the bonds should be selling...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 15​-year bonds have an annual coupon interest of 11...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 15​-year bonds have an annual coupon interest of 11 ​percent, make interest payments on a semiannual​ basis, and have a ​$1 comma 000 par value. If the bonds are trading with a​ market's required yield to maturity of 15 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? a. If the bonds are trading with a yield to maturity of 15​%, then ​ (Select the...
Smith 22-year bonds have an annual coupon interest of 8 percent, make interest payments on a...
Smith 22-year bonds have an annual coupon interest of 8 percent, make interest payments on a semiannual​ basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 15 percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? If the bonds are trading with a yield to maturity of 15%, then: A. the bonds should be selling at par because the​ bond's coupon...
Doisneau 16​-year bonds have an annual coupon interest of 9 ​percent, make interest payments on a...
Doisneau 16​-year bonds have an annual coupon interest of 9 ​percent, make interest payments on a semiannual​ basis, and have a ​$1,000 par value. If the bonds are trading with a​ market's required yield to maturity of 17 ​percent, are these premium or discount​ bonds? The price of the bonds is ​$_____ (Round to the nearest​ cent.)
Doisneau 25​-year bonds have an annual coupon interest of 8 ​percent, make interest payments on a...
Doisneau 25​-year bonds have an annual coupon interest of 8 ​percent, make interest payments on a semiannual​ basis, and have a ​$1,000 par value. If the bonds are trading with a​ market's required yield to maturity of 17 percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? The price of the bonds is ​? . (Round to the nearest​ cent.)
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 19​-year bonds have an annual coupon interest of 12...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 19​-year bonds have an annual coupon interest of 12 ​percent, make interest payments on a semiannual​ basis, and have a ​$1, 000 par value. If the bonds are trading with a​ market's required yield to maturity of 13 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? a. If the bonds are trading with a yield to maturity of 13​%,  The price of the bonds...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 20​-year bonds have an annual coupon interest of 11...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 20​-year bonds have an annual coupon interest of 11 ​percent, make interest payments on a semiannual​ basis, and have a ​$1 comma 000 par value. If the bonds are trading with a​ market's required yield to maturity of 15 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds?
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 15​-year bonds have an annual coupon interest of 11...
​(Related to Checkpoint​ 9.3)  ​(Bond valuation) Doisneau 15​-year bonds have an annual coupon interest of 11 ​percent, make interest payments on a semiannual​ basis, and have a ​$1,000 par value. If the bonds are trading with a​market's required yield to maturity of 15 ​percent, are these premium or discount​ bonds? Explain your answer. What is the price of the​ bonds? a. If the bonds are trading with a yield to maturity of 15​%, then ​ (Select the best choice​ below.)  ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT