Question

in 2015 you bought $1,000 face value bond. 20 year maturity. 7% coupon. in 2020 you...

in 2015 you bought $1,000 face value bond. 20 year maturity. 7% coupon. in 2020 you sell. bond has 9% coupon. what is value in 2020? formula please also

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
The price of the bond will be the PV of the expected cash flows from
the bond when discounted at 9%. The expected cash flows are the
maturity value [face value] of $1,000 and the 15 yearly interest income
of $70.
PV of the maturity value = 1000/1.09^15 = $         274.54
PV of the annual interest [annuity] using formula = 70*(1.09^15-1)/(0.09*1.09^15) = $         564.25
Value of the bond in 2020 $         838.79
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
2015 bought $1000 20 year 7% bond. if stayed the same what is the value in...
2015 bought $1000 20 year 7% bond. if stayed the same what is the value in 2020? show work & formula please
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to...
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 2.7% (EAR). You keep the bond for 5 years before selling it. The price of the bond today is P 0 = F ( 1 + r ) T = 1,000 1.027 10 = 766.12 If the yield to maturity is still 2.7% when you sell the bond at the end of year-5, what is your personal ANNUAL rate of return?
Suppose that you bought a four year coupon bond with $10,000 face value, 6% coupon rate...
Suppose that you bought a four year coupon bond with $10,000 face value, 6% coupon rate and 7% yield to maturity. After holding it for a year and collecting the first coupon payment you decide to sell it. Calculate the return (in %) on this investment if the interest rate has just dropped to 5%. With Formula's Please
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to...
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 3.4% (EAR). You keep the bond for 5 years before selling it. The price of the bond today is P0=F(1+r)T=1,0001.03410=P0=F(1+r)T=1,0001.03410= 715.8 If the yield to maturity is still 3.4% when you sell the bond at the end of year-5, what is your personal annual rate of return?
You just bought a 6% coupon bond for $1,065. The bond has a 7-year remaining maturity,...
You just bought a 6% coupon bond for $1,065. The bond has a 7-year remaining maturity, a $1000 face value, and pays coupons semiannually. What will be the value of your bond 3 years from now if interest rates remain unchanged? please answer not using excel!
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a...
A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 8.8%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the bond’s yield to maturity if the bond is selling for $980? b. What is the bond’s yield to maturity if the bond is selling for $1,000? c. What is the bond’s yield to maturity if the bond is selling for...
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values: RATE NPER PMT FV TYPE
Suppose you bought a 15-year $1,000 face-value bond for $945 one year ago. The annual coupon...
Suppose you bought a 15-year $1,000 face-value bond for $945 one year ago. The annual coupon rate is 7% and interest payments are paid annually. If the price today is $995, the yield to maturity must have changed from _____________ to ______________. 8.12%; 6.94% 7.12%; 8.11% 7.63%; 7.06% 9.11%; 9.35% None of the above
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values: RATE NPER PMT FV TYPE Repeat problem , but with annual coupon payments. RATE NPER PMT FV TYPE
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.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT