Question

A 6% coupon, 24-year annual bond has a yield to maturity of 4.4%. Assuming the par...

A 6% coupon, 24-year annual bond has a yield to maturity of 4.4%. Assuming the par value is $1,000 and the YTM does not change over the next year, what will the price of the bond be today? What will the bond price be in one year? What is the capital gains yield for this bond?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Hello Sir/ Mam

Given that:

Future Value = $1000

n = 24

YTM = 4.4%

Coupon = 60

Using Excel formula, "=PV(4.4%,24,-60,-1000,0)", we can calculate the market value of the bond today, i.e. $1,234.26

Price of Bond after one year can be calculated by changing n from 24 to 23. Hence,

Using Excel formula, "=PV(4.4%,23,-60,-1000,0)", we can calculate the market value of the bond today, i.e. $1,228.57.

I hope this solves your doubt.

Do give a thumbs up if you find this helpful.

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 8.3% coupon, 8-year annual bond has a yield to maturity of 6.3%. Assuming the par...
A 8.3% coupon, 8-year annual bond has a yield to maturity of 6.3%. Assuming the par value is $1,000 and the YTM does not change over the next year, what will the price of the bond be today? What will the bond price be in one year to nearest cent? What is the capital gains yield for this bond?
A 5.60% annual coupon, 5-year bond has a yield to maturity of 9.50%. Assuming the par...
A 5.60% annual coupon, 5-year bond has a yield to maturity of 9.50%. Assuming the par value is $1,000 and the yield to maturity is expected not to change over the next year. a) What should the price of the bond be today? b) What is the bond price expected to be in one year? c) What is the expected Capital Gains Yield for this bond? d) What is the expected Current Yield for this bond?
1.A 12-year bond has a 9 percent annual coupon, a yield to maturity of 11.4 percent,...
1.A 12-year bond has a 9 percent annual coupon, a yield to maturity of 11.4 percent, and a face value of $1,000. What is the price of the bond? 2.You just purchased a $1,000 par value, 9-year, 7 percent annual coupon bond that pays interest on a semiannual basis. The bond sells for $920. What is the bond’s nominal yield to maturity? a.         7.28% b.         8.28% c.         9.60% d.         8.67% e.         4.13% f.          None of the above 3.A bond with...
3) A bond currently sells for $850.  It has an eight-year maturity, an annual coupon of $80...
3) A bond currently sells for $850.  It has an eight-year maturity, an annual coupon of $80 but paid semi-annually, and a par value of $1,000. This bond has a callable feature. If this bond can be called after 5 years, for $1,025. (1) What is its annual yield to maturity?   (2) What is its current yield?     (3) What is the bond’s nominal yield to call (YTC)? (4)   If you bought this bond, would you be more likely to earn the YTM...
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The...
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The required rate of return (yield to maturity)on the bond is 8.5%. Compute the price of the bond today using the appropriate Excel formula Compute the price of the same bond if it has 10 years remaining to maturity instead of 11. What is the capital gains yield on the bond? What is the current yield on the bond? What is the total yield on...
1.A 6% annual coupon bond (par=$1,000) with 15 years to maturity is selling for $1,050. a.What...
1.A 6% annual coupon bond (par=$1,000) with 15 years to maturity is selling for $1,050. a.What is the bond’s Yield-to-Maturity (YTM)? b.What is the bond’s current yield (CY)? c.What is the bond’s capital gains rate or yield (CGY)?
11 year 8% annual coupon bond has a yield to maturity of 11.2% with a par...
11 year 8% annual coupon bond has a yield to maturity of 11.2% with a par value of $1,000. What is the price of this bond? (Round to two decimal places)
Question 1 of 71 The yield to maturity on a coupon bond is … ·      always greater...
Question 1 of 71 The yield to maturity on a coupon bond is … ·      always greater than the coupon rate. ·       the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the current yield. ·      the rate an investor earns if she holds the bond to the maturity date, assuming she can reinvest all coupons at the yield to maturity. ·      only equal to the internal rate of return of a bond...
The semi-annual bonds of Delta Company have a coupon rate of 6%, a Yield to Maturity...
The semi-annual bonds of Delta Company have a coupon rate of 6%, a Yield to Maturity of 8%, a par value of $1,000, and 20-years to maturity. a. Calculate the price of a Delta Company bond today. b. What will be the price of a Delta Company bond in 1 year if the YTM decreases to 7%?
A bond has a $1,000 par value, 8 years to maturity, and a 7% annual coupon...
A bond has a $1,000 par value, 8 years to maturity, and a 7% annual coupon and sells for $980. What is its yield to maturity (YTM)? Round your answer to two decimal places.     % Assume that the yield to maturity remains constant for the next two years. What will the price be 2 years from today? Do not round intermediate calculations. Round your answer to the nearest cent. $  
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT