Question

What is the value of a bond that pays a 6% semi-annual coupon, has a face...

What is the value of a bond that pays a 6% semi-annual coupon, has a face value of $1,000, matures in 20 years, and has a yield to maturity of 8%?

Question 45 options:

$803.64

$808.43

$805.12

$802.07

Homework Answers

Answer #1

Information provided:

Face value= future value= $1,000

Time= 20 years*2= 40 semi-annual periods

Coupon rate= 6%/2= 3%

Coupon payment= 0.03*1,000= $30 per semi-annual period

Yield to maturity= 8%/2= 4% per semi-annual period

The value of the bond is calculated by computing the present value.

Enter the below in a financial calculator to compute the present value:

FV= 1,000

PMT= 30

I/Y= 4

N= 40

Press the CPT key and PV to compute the present value.

The value obtained is 802.07.

Therefore, the value of the bond is $802.07.

Hence, the answer is option d.   

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
An 8%, semi-annual coupon bond has a $1,000 face value and matures in 8 years. What...
An 8%, semi-annual coupon bond has a $1,000 face value and matures in 8 years. What is the current yield on this bond if the yield to maturity is 7.8%?
HW9 #6) Bond A pays annual coupons, pays its next coupon in 1 year, matures in...
HW9 #6) Bond A pays annual coupons, pays its next coupon in 1 year, matures in 12 years, and has a face value of 1,000 dollars. Bond B pays semi-annual coupons, pays its next coupon in 6 months, matures in 13 years, and has a face value of 1,000 dollars. The two bonds have the same yield-to-maturity. Bond A has a coupon rate of 8.46 percent and is priced at 836.24 dollars. Bond B has a coupon rate of 7.72...
A coupon bond that pays interest semi-annually has a par value of $1,000, matures in five...
A coupon bond that pays interest semi-annually has a par value of $1,000, matures in five years, and has a yield to maturity of 10%. The intrinsic value of the bond today will be __________ if the coupon rate is 8%. Multiple Choice $1,077.20 $1,075.80 $922.78 None of the options $924.16
Bond A pays annual coupons, pays its next coupon in 1 year, matures in 17 years,...
Bond A pays annual coupons, pays its next coupon in 1 year, matures in 17 years, and has a face value of 1,000 dollars. Bond B pays semi-annual coupons, pays its next coupon in 6 months, matures in 15 years, and has a face value of 1,000 dollars. The two bonds have the same yield-to-maturity. Bond A has a coupon rate of 9.28 percent and is priced at 998.32 dollars. Bond B has a coupon rate of 9.62 percent. What...
A semi-annual bond has a face value of $1,000, a coupon rate of 7.2%, a yield...
A semi-annual bond has a face value of $1,000, a coupon rate of 7.2%, a yield to maturity of 5.5% and has 5 years remaining to maturity. What is the price of the bond?
The $1,000 face value ABC bond has a coupon rate of 6%, with interest paid semi-annually,...
The $1,000 face value ABC bond has a coupon rate of 6%, with interest paid semi-annually, and matures in 5 years. If the bond is priced to yield 8%, what is the bond's value today?
An semi-annual coupon bond with a $2,000 face value matures in 4 years. The bond currently...
An semi-annual coupon bond with a $2,000 face value matures in 4 years. The bond currently sells for $1627.412 and has a 12 percent yield to maturity. What is the bond’s nominal coupon rate?
A bond pays a semi-annual coupon at an APR of 10.00%. The bond will mature in...
A bond pays a semi-annual coupon at an APR of 10.00%. The bond will mature in 7.00 years and has a face value of $1,000.00. The bond has a yield-to-maturity of 12.50% APR. What is the current yield for the bond? What is the current yield for the bond? A bond has ten years until maturity. The face value on the bond is $1,000.00, while the coupon rate attached to the bond is 9.75%. The bond pays coupons on an...
AbC Corporations (ABC) issues a bond that pays 10% semi-annual coupon, have a $1,000 face value,...
AbC Corporations (ABC) issues a bond that pays 10% semi-annual coupon, have a $1,000 face value, and mature in 10 years. If ABC bonds are sold to yield 8%, what is the price of ABC bond at the end of year 2. If ABC issue the same bond (same coupon rate, face value and maturity) with ‘callable’ feature, would the price of ABC bond be lower or higher? Explain.
An Australian Government bond with a face value of $1,000 and an annual coupon rate of...
An Australian Government bond with a face value of $1,000 and an annual coupon rate of 5.5% matures in seven years, pays interest semi-annually, and has a yield to maturity of 6.2%. What is the price of the bond right after it makes its first coupon payment? a. $947.21 b. $960.73 c. $945.08 d. $963.01