Question

A 25 year, $1000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $790. If the yield to maturity remains at its current rate, what will the price be 5 years from now?

Answer #1

**Price of the Bond,
5Years from Now = $ 907.60**

Step – 1, Calculate the Yield to Maturity[YTM] of the Bond

Yield To Maturity [YTM] = Coupon Amount + [ (Face Value – Bond Price) / Maturity Years ] / [(Face Value + Bond Price)/2]

= $85 + [ ($1,000 - $790) / 25 ) ] / [($1,000 + $790) / 2]

= [$85 + 8.40 / $895] x 100

= 11%

Step – 2, Calculate the Price of the Bond at 11% , 5 Years from Now

Price of a bond = Present Value of Coupon payments + Present Value of Par Value

= $85 x (PVIF 11%, 5 Years) + $1,000 x (PVF 11%, 5 Years)

= [$85 x 3.6958970] + [$1,000 x 0.593451]

= $ 314.15 + 593.45

= $ 907.60

A 25-year, $1,000 par value bond has an 8.5% annual coupon. The
bond currently sells for $875. If the yield to maturity remains at
its current rate, what will the price be 5 years from now?

A 25-year, $1,000 par value bond has an 8.5% annual payment
coupon. The bond currently sells for $925. If the yield to maturity
remains at its current rate, what will the price be 10 years from
now?
a.
$950.49
b.
$930.11
c.
$865.00
d.
$850.49
e.
$1021.11

A 25-year, $1,000 par value bond has an 8.5% annual coupon. The
bond currently sells for $875. If the yield to maturity remains at
its current rate, what will be price be 7 years from now?
*Mention the excel functions you used and the value of each
input you entered

A 30-year, $1,000 par value bond has an annual payment coupon of
7.5%. The bond currently sells for $910. If the yield to maturity
remains at its current rate what will the price be 10 years from
now?

•A 20-year, $1,000 par value bond has an 6.5% annual payment
coupon. The bond currently sells for $1025. If the yield to
maturity remains at its current rate, what will the price be 8
years from now?

A 30-year, $1,000 par value bond has a 7.5% annual payment
coupon. The bond currently sells for $910. If the yield to maturity
remains at its current rate, what will the price be 10 years from
now?
$884.19
$921.01
$930.96
$947.25
$978.50

A 20-year, $1,000 par value bond has a 9% semi-annual coupon.
The bond currently sells for $925. If the yield to maturity remains
at its current rate, what will the price be 8 years from now?
a.
$937.7
b.
$956.95
c.
$939.85
d.
$503.21

A 20-year, $1,000 par value bond has a 9% semi-annual coupon.
The bond currently sells for $925. If the yield to maturity remains
at its current rate, what will the price be 10 years from now? a.
$935.01 b. $930.01 c. $952.84 d. $945.72

1. Analyze the 20-year, 8% coupon rate (Semi-annual payment),
$1,000 par value bond. The bond currently sells for $1,218. What's
the bond's yield to maturity?
A. 5.06%
B. 5.68%
C. 5.38%
D. 6.10%
2. Analyze the 20-year, 8% coupon rate (Semi-annual payment),
$1,000 par value bond. The bond currently sells for $1,218. What's
the bond's current yield, and capital gain yield? (Please show your
work)
A. 6.57%, -0.47%
B. 6.07%, -0.69%
C. 6.57%, -0.47%
D. 6.07%, 0.69%

A 10-year corporate bond has an annual coupon payment of 5.3%.
The bond is currently selling at par ($1,000). Which of the
following statement is not correct? Why?
The bond’s capital gain yield is 5.3%.
The bond’s yield to maturity is 5.3%.
The bond’s current yield is 5.3%.
If the bond’s yield to maturity remains constant, the bond’s
price will remain at par.

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