Question

What must be the price of a $ 1000 bond with a 6 ​% coupon​ rate,...

What must be the price of a $ 1000 bond with a 6 ​% coupon​ rate, annual​ coupons, and 20 years to maturity if YTM is 8.9 % ​APR? A. $ 733.37 B. $ 880.05 C. $ 586.70 D. $ 1 026.72

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Information provided:

Future value= $1,000

Coupon rate= 6%

Coupon payment= 0.06*1,000= $60

Yield to maturity= 8.9%

Time= 20 years

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

The present value of the bond is computed by entering the below in a financial calculator:

FV= 1,000

PMT= 60

I/Y= 8.9

N= 20

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

The value obtained is $733.37.

The price of the bond is $733.37 and the answer is option a.

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
What must be the price of a $ 2 comma 000$2,000 bond with a 5.95.9% coupon...
What must be the price of a $ 2 comma 000$2,000 bond with a 5.95.9% coupon rate, annual coupons, and 3030 years to maturity if YTM is 7.8 %7.8% APR? A. $ 1 comma 564.00$1,564.00 B. $ 1 comma 251.20$1,251.20 C. $ 2 comma 189.60$2,189.60 D. $ 1 comma 876.80$1,876.80
Bond A has 2 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and...
Bond A has 2 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Bond B has 10 years to maturity, 5% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Bond C has 10 years to maturity, 4% coupon rate, 5% YTM, $1000 par value, and semiannual coupons. Which comparison is TRUE? A. Bond A has higher price sensitivity than Bond B B. Bond C has higher price sensitivity than Bond A C. Bond...
What must be the price of a $ 5000 bond with a 6.4​% coupon​ rate, semiannual​...
What must be the price of a $ 5000 bond with a 6.4​% coupon​ rate, semiannual​ coupons, and two years to maturity if it has a yield to maturity of 8​% ​APR?
A bond with $1000 face value, 6% of coupon rate, coupons are paid semiannually, 20 years...
A bond with $1000 face value, 6% of coupon rate, coupons are paid semiannually, 20 years of maturity, the YTM is 5%. What is the price of the bond If the risk free rate goes up by 0.5%, what will be the price of the bond. If you know that the firm will call the bond at the end of year 10, for a value of $1200, what will be the current price?
9) what should the price be for a $1000 face value bond with a 1% coupon...
9) what should the price be for a $1000 face value bond with a 1% coupon rate, semi-annual coupon payments, and five years to maturity if the YTM is 12% a) $568 b)$595 c) $689 d)$1000   10) What is future of $10 invested today, if it is invested for three years with annual compounding at a 24% interest? a) 11.9 b) 17.2 c)19.1 d) 20.1
What is the price of a 6% coupon bond if the bond is priced to yield...
What is the price of a 6% coupon bond if the bond is priced to yield 5% YTM, and has 9 years to maturity? Assume $1000 par value and semiannual coupon payments. What will be the rate of return on the bond if the yield to maturity at the end of the year is (a) 3%? (b) 5%? (c) 7%?
1)What is the price of a bond if the par value is $1000, the coupon rate...
1)What is the price of a bond if the par value is $1000, the coupon rate is 5%(paid semi-annually), has 20 years to maturity and the market rate (yield to maturity per annum) is 8%? A. $683.11 B. $703.11 C. $813.11 D. $923.11 E. 1063.11 2) What is the coupon rate of a bond with a par value of $1000, it is currently selling for $800, has 15 years to maturity and the market rate (yield to maturity) is 10%...
What must be the price of a $ 10 comma 000 bond with a 6.1​% coupon​...
What must be the price of a $ 10 comma 000 bond with a 6.1​% coupon​ rate, semiannual​ coupons, and nine years to maturity if it has a yield to maturity of 11​% ​APR? A. $ 10 comma 143
On January 1, 2017, you buy a three-year, annual-pay coupon bond with 6% coupon rate, $1000...
On January 1, 2017, you buy a three-year, annual-pay coupon bond with 6% coupon rate, $1000 face value, and yield to maturity 6%. On January 1, 2018, you receive the first coupon of the bond, and on January 1, 2019, you receive the second coupon. Immediately after receiving the second coupon, you sell the bond. Assume that yields on bonds of all maturities are equal to 4.5% on January 1, 2019. a) (10 points) What is the price that you...
The YTM of a $1000 bond with 10% coupon rate, semiannual coupons, and two years to...
The YTM of a $1000 bond with 10% coupon rate, semiannual coupons, and two years to maturity is 6.5% APR, compounded semiannually. 1. suppose the market price of this bond currently is $980. is there an arbitrage opportunity? 2. is this bond undervalued or overvalued by the market? a. I don't know,  b. undervalued , c. overvalued 3. should you long or short this bond? a. I don't know, b. long, c. short 4. how much will be your arbitrage profit?...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT