Question

2). In April 2020 you purchase 100 euros of bonds in Greece which pay a 5%...

2). In April 2020 you purchase 100 euros of bonds in Greece which pay a 5% coupon every year. If the bond matures in 2025 (five years) and the YTM is 3.0%, what is the value of the bond?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Period Discounting Factor
[1/(1.03^period)]		 Discounting Factor Annuity
(Sum of discounting factor & all previous discounting factors)
1 0.970873786 0.970873786
2 0.942595909 1.913469696
3 0.915141659 2.828611355
4 0.888487048 3.717098403
5 0.862608784 4.579707187

Value of Bond = PV of Maturity Amount + PV of All Coupons = [Maturity Value*Discounting Factor] + [Coupon*Annuity Factor] = [100*0.8626] + [100*5%*4.5797] = 86.26 + 22.8985 = $109.1585

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
1. It is now Jane 1, 2020, and you are considering the purchase of an outstanding...
1. It is now Jane 1, 2020, and you are considering the purchase of an outstanding bond that was issued on June 1, 2018. It has an 6% annual coupon and had a 20-year original maturity. (It matures on June 1, 2038.) There is 5 years of call protection (until November 1, 2025), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is...
Telstra is selling 5 year bonds at a face value of $1,000,000 which pay a semi-annual...
Telstra is selling 5 year bonds at a face value of $1,000,000 which pay a semi-annual coupon of 6% p.a. You require a yield-to-maturity (YTM) of 7% p.a. on Telstra's bonds, what price are you willing to pay for each Telstra bond?
While most bonds pay a coupon (regularly scheduled interest payments), some bonds do not. These zero...
While most bonds pay a coupon (regularly scheduled interest payments), some bonds do not. These zero coupon bonds pay interest only when the bond matures. Pricing these bonds is different, but easier, than pricing coupon bonds. You want to purchase a zero coupon bond with a par value of $10,000 and 15 years to maturity. The annual yield to maturity on this bond is 5.2 percent with semi-annual compounding. What is the price of the bond
A $10,000 face value coupon bond is purchased on 2/10/2020 and matures on 5/31/2031. It pays...
A $10,000 face value coupon bond is purchased on 2/10/2020 and matures on 5/31/2031. It pays a total of $300 annual coupon payments and is currently selling for $10,381.80. a) What is the annual Coupon Rate? b) What is the price per $100 face value? c) What is the Face Value per $100? d) What is the YTM?
A "zero coupon bond" (or just "zero") is a bond, that does not pay any interest,...
A "zero coupon bond" (or just "zero") is a bond, that does not pay any interest, it just pays the face value when it matures. Of course nobody would purchase a bond without interest, that's why zero coupon bonds are sold at a discount. Suppose you are given the following information about the current prices of zero coupon bonds: bond: price 1-year zero, face value $1,000 $909.09 2-year zero, face value $1,000 $826.45 3-year zero, face value $1,000 $718.65 I.e....
Suppose a 2 year 5% (annual coupon) bonds are selling at par (that is, for $100...
Suppose a 2 year 5% (annual coupon) bonds are selling at par (that is, for $100 of face value, the price is equal to $100) and 1 year zero coupon bonds has a yield to maturity of 7%. (a) What are the 1-year and 2-year interest rates, r1 and r2, respectively? (b) What should be the price of a two year 8% coupon bond with a face value of $100? (c) What are the Durations of 5% coupon bonds and...
Consider the following three bonds which you bought today at the listed purchase prices. Bond A:...
Consider the following three bonds which you bought today at the listed purchase prices. Bond A: Purchase price $15,000 with Face Value of $20,000 in 1 years. Bond B: a perpetuity has a price of $1250 and an annual coupon payment of $25 Bond C: Purchase price of $15000, Face Value of $20,000 in 10 years and pays annual coupon payments of $25 Assume 1 year from now you want to sell these bonds: For each of these bonds calculate...
The JCS Company has two bonds outstanding. Both bonds pay $100 annual interest plus $1,000 at...
The JCS Company has two bonds outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L matures in 15 years, whereas Bond S matures in one year. One interest payment remains on Bond S. What will be the values of these bonds when the going rate of interest is (a) 5 percent and (b) 7 percent?
1. On April 1, 2020 Garr Co. issued $3,000,000 of 5%, 5-year convertible bonds at a...
1. On April 1, 2020 Garr Co. issued $3,000,000 of 5%, 5-year convertible bonds at a price of 98. The bonds pay interest on April 1 and October 1. Bond discount is amortized each interest payment period on a straight-line basis. On April 1, 2021, all of these bonds were converted into 20,000 shares of $5 par common stock. a) Prepare the entry to record the original issuance of the convertible bonds. b) Prepare the entries to record the interest...
1. Ahmad Corp. just issued ten-year bonds that make annual coupon payments of $50. suppose you...
1. Ahmad Corp. just issued ten-year bonds that make annual coupon payments of $50. suppose you purchased one of these bonds at par value ($1,000) when it was issued. Right after your purchase, market interest rates jumped, and the YTM (interest rate) on your bond rose to six percent. What is the new price of you bond? 2. Assume a bond matures for $1000 six years from today and has a 7% coupon rate with semiannual coupons. What is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT