Question

8. A bond with 20 years to maturity is selling for $1,250 and has a yield to maturity of 13.5 percent. If this bond pays its coupon payments semi-annually and its par value is $1,000, what is the bond’s annual coupon rate?

Group of answer choices

A. 18.13 percent

B.17.14 percent

C. 17.42 percent

D. 8.57 percent

Answer #1

You need to use a Financial calculator to solve this problem. You can download it.

N = 20 * 2 = 40 (The Bond is for 20 Years, semiannual, so 40 payments)

PV = -1250 (The present value of the bond is $1250)

FV = 1,000 (The Face value of bond is $1,000)

I/Y = 13.5/2 = 6.75 (The YTM is for 1 year, so semiannual will be divided by 2)

CPT + PMT = 85.71

So 85.71 is the semiannual payment, so annual will be 85.71*2 = 171.42

So the coupon rate is (Coupon / Face Value) * 100

= (171.42 / 1000) * 100

= 17.14%

The correct option is "B"

**If you find the solution to be helpful, kindly give a
thumbs up**

Johnston, Inc. is selling bonds for $775.37. Each bond has an 8%
coupon rate and makes payments semi-annually. The bond matures in
25 years. What is the bond’s yield-to-maturity?
Shieldsly, Inc. has a 9 percent coupon bond that matures in 5
years. The bond pays interest annually. What is the market price of
a $1,000 face value bond if the yield to maturity is 7.56
percent?
$1,126.64
$1,000.00
$1,146.13
$1,058.17
$363.55

Stealers Wheel Software has 8 percent coupon bond on the market
with 10 years to maturity, and the par value of $1,000. The bonds
make semi-annual coupon payments and currently sell for $980. What
is the YTM? If the bond with the same maturity and similar risk
pays 6% annual coupon (pays semi-annually), what should be the
market price of the second bond?

A 5 percent coupon bond has 20 years left to maturity and has a
price quote of 95 (quoted bond price is $950). The bond can be
called in five years and if called would generate a yield to call
of 8 percent. Compute the bond's current yield, yield to maturity
and call price. (Assume interest payments are paid semi-annually
and a par value of $1,000.)

A 5 percent coupon bond has 20 years left to maturity and has a
price quote of 95 (quoted bond price is $950). The bond can be
called in five years and if called would generate a yield to call
of 8 percent. Compute the bond's current yield, yield to maturity
and call price. (Assume interest payments are paid semi-annually
and a par value of $1,000.)

A 5 percent coupon bond has 20 years left to maturity and has a
price quote of 95 (quoted bond price is $950). The bond can be
called in five years and if called would generate a yield to call
of 8 percent. Compute the bond's current yield, yield to maturity
and call price. (Assume interest payments are paid semi-annually
and a par value of $1,000.)

A 20-year maturity bond with face value of $1,000 makes annual
coupon payments and has a coupon rate of 8.8%. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 3 decimal places.)
a. What is the bond’s yield to maturity if the bond is selling
for $980?
b. What is the bond’s yield to maturity if the bond is selling
for $1,000?
c. What is the bond’s yield to maturity if the bond is selling
for...

Consider a 6-year, $1,000 par bond that pays
semi-annual coupon. Its yield to maturity is 7% and is selling for
$1,095.452? Find the coupon rate of this bond.

A $1,000 face value
bond currently has a discount rate (yield-to-maturity) of 6.69
percent. The bond matures in three years and pays coupon annually.
The coupon rate is 7 percent. What type of bond it is?
Group of answer choices
Premium bond
Discount bond
Par bond
Zero-coupon bond

1. A 9-year zero coupon bond has a yield to maturity of
11.8 percent, and a par value of $1,000. What is the
price of the bond?
2. A 7-year bond has a 8 percent coupon rate with the interest
paid in semi annual payments. The yield to maturity of
the bond is 2.3 percent, and a face value of
$1,000. What is the price of the bond?
3. A 12-year bond has a 9 percent annual coupon, a yield to
maturity of...

1. Omega Enterprises has an 8% coupon bond with exactly 16 years
to maturity. Interest is paid semi-annually. The bond is priced at
$1,125 per $1,000 of face value. a.) What is the yield to maturity
on this bond? b.)An investor purchased the bond at $1,125 and sold
it 5 years later at a price of $1,023. What was the investor’s
return. (Hint: calculate the YTM as in a) above but use the sale
price as the future value.
2....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 11 minutes ago

asked 12 minutes ago

asked 19 minutes ago

asked 20 minutes ago

asked 21 minutes ago

asked 30 minutes ago

asked 45 minutes ago

asked 45 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago