Question

A five-year bond has a face value of $1,000. Its coupon rate is 5% p.a. and...

A five-year bond has a face value of $1,000. Its coupon rate is 5% p.a. and coupons are paid semi-annually.

a. If the market yield at issuance is 5%, without calculation identify the price of the bond would be?

b. If we hold the bond for 1.5 years and then sell it at a yield of 4% p.a. What would the selling price be?

c. What would the holding period yield p.a. on this investment be?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) As the market yield is equal to the coupon rate so the price of bond will be at par i.e. $1000

b)

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 five-year bond with a face value of $500,000 and semi-annual coupon of $19,000. The...
Consider a five-year bond with a face value of $500,000 and semi-annual coupon of $19,000. The market yield is 7.00% p.a. (a) What is the price of the bond? (b) We hold the bond for 1.5 years and then sell it at a yield of 7.50% p.a. What is the selling price and what is the holding period yield p.a. on this investment? (Show all your workings and round off your result to two decimals)
Nunavet Ocean Cruises issued a bond at a face value of $10,000 with 7 years to...
Nunavet Ocean Cruises issued a bond at a face value of $10,000 with 7 years to maturity. The bond has a coupon rate of 9% p.a. and coupons are paid annually. The yield on the bond is 9% per annum. a. Without calculation, identify and explain how much the bond would be priced at the time the bond was issued? b. An investor, Jason bought the bond at issuance, held it for 3 years and then sold it for $9,000...
A 10-year bond has a face value of $1,000 with a 5% per annum coupon rate....
A 10-year bond has a face value of $1,000 with a 5% per annum coupon rate. The bond pays coupons semi-annually. The current yield to maturity of the bond is 4% per annum. After 5 years, the yield to maturity of the bond is predicted to increase to 6% per annum, what would be the value of the bond in Year 5?
Compute the Yield to Call (YTC) of a 9% coupon bond, with a $1,000 face value...
Compute the Yield to Call (YTC) of a 9% coupon bond, with a $1,000 face value maturing 20 years from now, but callable in 10 years with a call price of $1,300. Assume the market price of the bond to be $750 and that the coupons are: a)   paid annually. b)   paid semi-annually.
What is the price of a 4-year bond with a coupon rate of 10% and face...
What is the price of a 4-year bond with a coupon rate of 10% and face value of $1,000? Assume the bond is trading at 10% yield, and that coupons are paid semi-annually. Assume semi-annual compounding. Round your answer to the nearest cent (2 decimal places). What is the yield of a 3-year bond with a coupon rate of 9% and face value of $100? Assume the bond is currently trading at a price of $100, and that coupons are...
A Sprint bond has a face value of $1,000, a coupon rate of 7.75%, with coupons...
A Sprint bond has a face value of $1,000, a coupon rate of 7.75%, with coupons paid semi-annually, and 15 years to maturity. If the effective annual return for bonds of comparable risk is 7.75%, the price that you should be willing to pay for this bond is
1. A 30-year bond has a face value of $1,000 and a 9% coupon rate, paid...
1. A 30-year bond has a face value of $1,000 and a 9% coupon rate, paid semi-annually. a. You buy the bond today when it has a yield to maturity of 7%. Compute the price of the bond today.
A five-year corporate bond with a face value of $10,000 pays interest at a coupon rate...
A five-year corporate bond with a face value of $10,000 pays interest at a coupon rate of 5.0%. The required return for investing in this bond is 4.0%. At what market price will the bond sell if the interest is paid semi-annually?
a 10-year bond, $1,000 face value bond with a 8% coupon rate and semi-annual coupons has...
a 10-year bond, $1,000 face value bond with a 8% coupon rate and semi-annual coupons has a yield to maturity of 12%. the bond should be trading at the price of? round to nearest cent
Bond C has a $1,000 face value and provides an 8% coupon rate for 15 years....
Bond C has a $1,000 face value and provides an 8% coupon rate for 15 years. The coupons are paid semi-annually. The discount rate is 10% (annual rate). What is the value of the coupon bond?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT