Question

Moody's Corporation's bonds have a 15-year maturity, a 7.25% coupon paid semiannually, and a par value...

Moody's Corporation's bonds have a 15-year maturity, a 7.25% coupon paid semiannually, and a par value of $1,000. If the going market interest rate for bonds of similar risk and maturity is 6.00% (based on semiannual compounding), what is the bond's price?

Your answer should be between 1075.00 and 1275.00.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution.>

I have solved this question in Excel. The formula used are written along with the values. If you still have any doubt, kindly ask in the comment section.

The formula for the bond price is:

Face Value 1000 FORMULA
Coupon Rate 0.0725
Coupon Payment 36.25 =1000*0.0725/2
YTM 0.03 =0.06/2
No of Periods 30 =15*2
Bond Price 1122.50 =36.25*((1-(1+0.03)^(-30))/(0.03))+1000*((1+0.03)^(-30))

Note: Give it a thumbs up if it helps! Thanks in advance!

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
Moerdyk Corporation's bonds have a 12-year maturity, a 9.55% semiannual coupon, and a par value of...
Moerdyk Corporation's bonds have a 12-year maturity, a 9.55% semiannual coupon, and a par value of $1000. The going interest rate (rd) is 5.95%, based on semiannual compounding. What is the bond's price?
Kebt Corporation's Class Semi bonds have a 12-year maturity and an 6.00% coupon paid semiannually (3%...
Kebt Corporation's Class Semi bonds have a 12-year maturity and an 6.00% coupon paid semiannually (3% each 6 months), and those bonds sell at their $1,000 par value. The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell?
Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of...
Haswell Enterprises' bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 8.25%, based on semiannual compounding. What is the bond's price?
16) Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value...
16) Yest Corporation's bonds have a 15-year maturity, a 7% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6%, based on semiannual compounding. What is the bond’s price? Question 16 options: $1,008.65 $1,051.34 $1,024.67 $1,098.00 $1,105.78 17) Bond rating is a measure of interest rate risk Question 17 options: True False 18) The fisher effect expresses the relationship between coupon rate and yield. Question 18 options: True False 19) Stockholders have voting rights, and...
Mercy Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
Mercy Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,050. What is the bond's nominal yield to call? please show all work
Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a...
Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a par value of $1,000. The bonds are currently selling at a premium price of $1,100 in the bond market. What is their yield to maturity (YTM)?
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,195. What is the bond's nominal yield to call? Select the correct answer. a. 7.32% b. 7.16% c. 7.64% d. 7.48%
cayon Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
cayon Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 10 years at a price of $1,050. What is the bond's nominal yield to call? *Mention the excel functions you used and the value of each input you entered.
Kebt Corporation's Class Semi bonds have a 12 year maturity and an 6.5% coupon paid semiannually...
Kebt Corporation's Class Semi bonds have a 12 year maturity and an 6.5% coupon paid semiannually (3.25% each 6 months), and those bonds sell at their $1,000 par value. The firm's Class Ann bonds have the same risk, maturity, nominal interest rate, and par value, but these bonds pay interest annually. Neither bond is callable. At what price should the annual payment bond sell?
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000...
Jerome Corporation's bonds have 15 years to maturity, an 8.75% coupon paid semiannually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 6 years at a price of $1,105. What is the bond's nominal yield to call? Select the correct answer. a. 5.80% b. 5.50% c. 5.35% d. 5.95% e. 5.65%
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT