Question

Suppose that you purchased a Baa rated $1000 annual coupon bond with an 7.8% coupon rate and a 19-year maturity at par value. The current rate on 19-year US treasuries is 3%. Two years later, you look in the newspaper, and find that the yield on comparable debt is 7.080%, how much is the bond currently worth?

Answer #1

Face/Par Value of bond = $1000

Annual Coupon Bond = $1000*7.8%

= $78

No of years to maturity from now (n) = 19 years - 2 years = 17

Current Yield on comparable Bonds(YTM) = 7.080%

Calculating the Market price of Bond:-

Price = $757.330 + $312.578

Price = $1069.91

So, **the bond currently worth is $1069.91**

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Suppose that you purchased a Baa rated $1000 annual coupon bond
with an 8.1% coupon rate and a 9-year maturity at par value. The
current rate on 9-year US treasuries is 3%. Two years
later, you look in the newspaper, and find that the yield on
comparable debt is 6.892%, how much is the bond currently
worth?

Suppose that you purchased a A rated $5000 annual coupon bond
with an 6.9% coupon rate and a 13-year maturity at par value. The
current rate on 13-year US treasuries is 3%. Two years later, you
look in the newspaper, and find that the yield on comparable debt
is 9.345%, how much is the bond currently worth?

A $5000 annual coupon bond with an 5.3% coupon rate and a
18-year maturity at par value. The current rate on 18-year US
treasuries is 3%. Two years later, you look in the
newspaper, and find that the yield on comparable debt is 7.152%,
how much is the bond currently worth?

Suppose that you just purchased a Baa rated $1000 annual coupon
bond with an 5.3 % coupon rate and a 4 -year maturity. If the yield
to maturity on the bond is 6.495 %, how much did you pay?

Suppose that you purchased a A rated $5,000 annual coupon bond
with an 6.7% coupon rate and a 11-year maturity at par value. The
current rate on 11-year US treasuries is 3%. Two years later, you
sell the bond, and for a yield of 7.922%, what was your capital
gain (+) or capital loss (-) in dollars and cents? (make your
answer positive for a gain, negative for a loss)

Suppose that you purchased a A rated $5,000 annual coupon bond
with an 6.1% coupon rate and a 8-year maturity at par value. The
current rate on 8-year US treasuries is 3%. Two years later, you
sell the bond, and for a yield of 4.787%, what was your capital
gain (+) or capital loss (-) in dollars and cents? (make your
answer positive for a gain, negative for a loss)

A $5,000 annual coupon
bond with an 5.8% coupon rate and a 7-year maturity at par value.
The current rate on 7-year US treasuries is 3%. Two
years later, you sell the bond, and for a yield of 7.328%, what was
your capital gain (+) or capital loss (-) in dollars and cents?

Suppose, two years ago, you purchased a 10-year coupon bond
paying 4.5% interest annually with a face value of $1000. It is now
two years later and you just received an interest payment yesterday
(the bond matures in exactly eight years). You look in the paper
and the yield on comparable debt is 4.25%. What is the bond
currently worth?
Group of answer choices
$1,017
$976
$1,135
none of them
$1,060

18. Compute the yield to maturity of a $2,500 par value bond
with a coupon rate of 7.8% (quarterly payments - that is, four
times per year) that matures in years. The bond is currently
selling for $3,265
19. What is the yield to maturity of a $ par value bond with a
coupon rate of 9.5% (semi-annual coupon payments) that matures in
28 years assuming the bond is currently selling for
$838.137
par
value 1000

NHT, Inc. has $300 million of Baa-rated convertible bonds
outstanding. The bonds have a 6.5% coupon rate, with coupons paid
semiannually, and six years remaining to maturity. These bonds are
currently trading at 122.5% of face value. If Baa-rated
non-convertible bonds with six years remaining to maturity are
currently priced to yield 4.6%, decompose NHT’s convertible bonds
into their debt and equity components.

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