Question

Suppose a​ ten-year $1000 bond with an 8% coupon rate and semiannual coupons is trading for...

Suppose a​ ten-year $1000 bond with an 8% coupon rate and semiannual coupons is trading for $1034.74.

a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)?

b. If the​ bond's yield to maturity changes to ​9%APR, what will be the​ bond's price?

Homework Answers

Answer #1

given interest rate = 8%

cmp=$1034.74

maturity value= 1000

interest=1000*8%=80

semi annual interest =80/2=$40

n=10*2=20

ytm=3.76 semi annual

yearly =3.76*2=7.52 %

2) calculation fo price of bond if ytm is 9%

Given interest from above $40

maturity =1000

yield =9/2=4.5

n=10*2=20

PRICE OF BOND = Interest *PVAF( Yield %, n Years) + Maturity Value * PVF (Yield %, nth year)

=40*PVAF(4.5%, 20)+10000*PVF(4.5%, 20th year)

=40*13.0079+1000*.4146

=$934.92

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose a​ ten-year, $1000 bond with an 8.5% coupon rate and semiannual coupons is trading for...
Suppose a​ ten-year, $1000 bond with an 8.5% coupon rate and semiannual coupons is trading for $1035.32 a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding) b. If the​ bond's yield to maturity changes to 9.1% ​APR, what will be the​ bond's price
Suppose a​ ten-year, $ 1000 bond with an 8.4 % coupon rate and semiannual coupons is...
Suppose a​ ten-year, $ 1000 bond with an 8.4 % coupon rate and semiannual coupons is trading for $ 1035.35. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.5 % ​APR, what will be the​ bond's price?
Suppose a​ ten-year, $ 1000 bond with an 8.5 % coupon rate and semiannual coupons is...
Suppose a​ ten-year, $ 1000 bond with an 8.5 % coupon rate and semiannual coupons is trading for $ 1035.72 . a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.3 % APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.5 % coupon rate and semiannual coupons is trading...
Suppose a​ ten-year, $1,000 bond with an 8.5 % coupon rate and semiannual coupons is trading for $1,035.81. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.2 % ​APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for...
Suppose a​ ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $1,035.05. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.4% APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.3% coupon rate and semiannual coupons is trading for...
Suppose a​ ten-year, $1,000 bond with an 8.3% coupon rate and semiannual coupons is trading for $1,035.74. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.6% ​APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for...
Suppose a​ ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $1,034.44. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.6% ​APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for...
Suppose a​ ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for $1,035.08. a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.5% APR, what will be the​ bond's price?
Suppose a​ ten-year, $1,000 bond with an 8.1 % coupon rate and semiannual coupons is trading...
Suppose a​ ten-year, $1,000 bond with an 8.1 % coupon rate and semiannual coupons is trading for $ 1,034.88 a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? b. If the​ bond's yield to maturity changes to 9.1 % APR, what will be the​ bond's price?
Suppose a ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for...
Suppose a ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $1,035.45. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.2% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is_____%. (Round to two decimal places.) b. If the bond's yield...