Question

How much would you pay for a 8.6% Corp Bond that has a remaining maturity of...

How much would you pay for a 8.6% Corp Bond that has a remaining maturity of 10 years if the investors' required rate of return is 6%?

Homework Answers

Answer #1

Bond price = PV of Cash flows from it

Let's assume 1000 is maturity price.

Computation of Bond Price:

$1.19136 can be paid for each $1 maturity value

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
1) how much should you pay for a $1000 bond with 6% coupon, annual payments, and...
1) how much should you pay for a $1000 bond with 6% coupon, annual payments, and 16 years to maturity if the interested rate is 6%? 2) how much should you pay for a $1000 zero coupon bond with 5 years to maturity if the interest rate is 5%? 3) what is the rate of return for an investor who pays $1061 for a 3 year bond with an annual coupon payment of 6% and sells the bond 1 year...
Assume a corporation's bond has 19 years remaining until maturity. The coupon interest rate is 8.9%...
Assume a corporation's bond has 19 years remaining until maturity. The coupon interest rate is 8.9% and the bond pays interest semi-annually. Assume bond investors' required rate of return on the bond is 9.6%. What would be the expected market price of this bond. (Assume a $1000 par value.)
Austin Corp. issued a non-callable bond that has 14 years to maturity, an 8% semi-annual coupon,...
Austin Corp. issued a non-callable bond that has 14 years to maturity, an 8% semi-annual coupon, and a $1,000 par value. your required return on the Austin Corp. Bond is 9%, if you buy it, you plan to hold it for 9 years. You (and the market) have expectations that in 9 years, the yield to maturity on a 5-year bond with similar risk will be 9.5%. How much should you be willing to pay for the Austin Corp. Bond...
Assume a corporation's bond has 15 years remaining until maturity. The coupon interest rate is 9.4%...
Assume a corporation's bond has 15 years remaining until maturity. The coupon interest rate is 9.4% and the bond pays interest semi-annually. Assume bond investors' required rate of return on the bond is 9.7%. What would be the expected market price of this bond. (Assume a $1000 par value.) Answer to 2 decimal places.
How much would you pay for a bond that has a 4% coupon rate, matures in...
How much would you pay for a bond that has a 4% coupon rate, matures in 15 years and market interest rates have risen to 6%? (use semiannual payments) Please Explain
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The...
A 6% annual coupon bond has 11 years remaining until maturity. Par value is $1000. The required rate of return (yield to maturity)on the bond is 8.5%. Compute the price of the bond today using the appropriate Excel formula Compute the price of the same bond if it has 10 years remaining to maturity instead of 11. What is the capital gains yield on the bond? What is the current yield on the bond? What is the total yield on...
A bond has 6 years remaining to maturity and pays annual coupons at a rate of...
A bond has 6 years remaining to maturity and pays annual coupons at a rate of 5%. It has an annual yield-to-maturity of 7% and a face value of £1,000. What is the current price of the bond?                 ii. If market interest rates applicable to this type of bond are currently at 7% per year, would the price that you computed in be a fair price to pay for the bond? Explain why.
A 9% annual coupon bond with twenty years remaining to maturity is selling at $1,098.13. a....
A 9% annual coupon bond with twenty years remaining to maturity is selling at $1,098.13. a. What is the market interest rate on similar bonds?   b. What is the duration of this bond? c. Suppose the market interest rate increases by 1%. What would the investors be willing to pay for the bond now?
4. If you pay $900 for purchasing a 5.25% coupon bond, with 6 years remaining to...
4. If you pay $900 for purchasing a 5.25% coupon bond, with 6 years remaining to maturity, with par value of $1000, what would be your yield to maturity?
A $1,000 maturity value bond currently has 15 years left to maturity.  The bond has an 8.5%...
A $1,000 maturity value bond currently has 15 years left to maturity.  The bond has an 8.5% coupon rate and pays interest annually.   a.         If you want to earn a 7% rate of return, how much would you be willing               to pay today for this bond? b. Suppose you buy the bond for the value you calculated in part a.  After holding the bond for 2 years and receiving 2 interest payments, you sell the bond for $1,032.43.  What annual, compound rate of return...