Question

Consider a bond with 10,000 USD par value, 8% coupon rate paid semi annually and 10...

Consider a bond with 10,000 USD par value, 8% coupon rate paid semi annually and 10 years to maturity. Assuming a 10%

find the pv for the bond given its zero coupon bond
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If it is a zero coupon bond:

Par Value = $10,000

Time to Maturity = 10 years
Semiannual Period = 20

Annual Interest Rate = 10.00%
Semiannual Interest Rate = 5.00%

Present Value = $10,000 * PVIF(5.00%, 20)
Present Value = $10,000 * (1/1.05)^20
Present Value = $10,000 * 0.376890
Present Value = $3,768.90

If it is a coupon bond:

Par Value = $10,000

Annual Coupon Rate = 8.00%
Semiannual Coupon Rate = 4.00%
Semiannual Coupon = 4.00% * $10,000
Semiannual Coupon = $400

Time to Maturity = 10 years
Semiannual Period = 20

Annual Interest Rate = 10.00%
Semiannual Interest Rate = 5.00%

Present Value = $400 * PVIFA(5.00%, 20) + $10,000 * PVIF(5.00%, 20)
Present Value = $400 * (1 - (1/1.05)^20) / 0.05 + $10,000 * (1/1.05)^20
Present Value = $400 * 12.462210 + $10,000 * 0.376890
Present Value = $8,753.78

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
Consider a corporate bond with a 4.3% coupon rate, paid semi-annually, $1000 par value and a...
Consider a corporate bond with a 4.3% coupon rate, paid semi-annually, $1000 par value and a current yield to maturity (YTM) of 3.7%. It matures in exactly 8 years. What is the current market price of this bond? [Your final answer should be ROUNDED TO THE NEAREST DOLLAR, expressed in dollars only (eg 234) with no cents, and no commas!] Market Price =
A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid annually....
A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid annually. What is the value of the bond if your required rate of return is 5%? 2. A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid semi-annually. What is the value of the bond if your required rate of return is 5%? 3.  A $1,000 par-value bond with 5 years of maturity pays a 5% coupon rate, paid semi-annually. What...
A company issues a​ ten-year bond at par with a coupon rate of 6.1​% paid​ semi-annually....
A company issues a​ ten-year bond at par with a coupon rate of 6.1​% paid​ semi-annually. The YTM at the beginning of the third year of the bond​ (8 years left to​ maturity) is 8.9​%. What is the new price of the​ bond?
A company issues a​ ten-year bond at par with a coupon rate of 6.1% paid​ semi-annually....
A company issues a​ ten-year bond at par with a coupon rate of 6.1% paid​ semi-annually. The YTM at the beginning of the third year of the bond​ (8 years left to​ maturity) is 99​%. What is the new price of the​ bond? A. $1,005 B. $837 C. $1,172 D. ​$1,000
A 20-year bond has 10% coupon rate (paid semi-annually; next coupon due 6 months from today)...
A 20-year bond has 10% coupon rate (paid semi-annually; next coupon due 6 months from today) and $1,000 face value. Its yield to maturity (nominal, compounded semi-annually) is 8%. How much is a rational investor willing to pay for the bond? If the yield to maturity decreases from 8% to 6%, what will happen to the bond price?
The duration of a par value bond with a coupon rate of 6% (paid annually) and...
The duration of a par value bond with a coupon rate of 6% (paid annually) and a remaining time to maturity of 5 years is
A coupon bond that pays interest semi-annually has a par value of $1,000, matures in five...
A coupon bond that pays interest semi-annually has a par value of $1,000, matures in five years, and has a yield to maturity of 10%. The intrinsic value of the bond today will be __________ if the coupon rate is 8%. Multiple Choice $1,077.20 $1,075.80 $922.78 None of the options $924.16
1. What is the value of a $1,000 par value bond that has a 10% annual...
1. What is the value of a $1,000 par value bond that has a 10% annual coupon, and has ten years until maturity if the required rate of return (rd) is 8%. 2. What is the value of a $1,000 par value bond with a 8% coupon, paid semi-annually, which has 10 years until maturity and a required rate return of 12%. 3. What is the value of a zero coupon bond which matures in 20 years if the required...
a treasury bond has an annual coupon rate of 5% that is paid semi-annually. the Face...
a treasury bond has an annual coupon rate of 5% that is paid semi-annually. the Face Value of the bond is $1000 and it has 10 years to maturity with a yield to maturity of 6% (expressed as an apr with semi annual compounding) commpute the price of the bond.
For the following bond, Par value: 1,000 Coupon rate: 8% paid annually Time to maturity: 3...
For the following bond, Par value: 1,000 Coupon rate: 8% paid annually Time to maturity: 3 years Interest rate: 6% What is the modified duration? Select one: a. 2.6313 years b. 1.7834 years c. 2.1555 years d. 3.1808 years
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT