Question

A company has outstanding bonds with a $ 1,000 par value, a 7% coupon with semiannual...

A company has outstanding bonds with a $ 1,000 par value, a 7% coupon with semiannual payments. What is the bond’s price if there are 9 years to maturity, and the yield to maturity is 9%?
N=
I=
PV=
PMT=
FV=
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Information provided:

Par value= future value= $1,000

Coupon rate= 7%/2= 3.50%

Coupon payment= 0.035*1,000= $35

Yield to maturity= 9%/2= 4.50%

Time= 9 years*2= 18 semi-annual periods

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

The below has to be entered in a financial calculator to compute the present value:

FV= 1,000

PMT= 35

I/Y= 4.50

N= 18

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

The value obtained is 878.40.

Therefore, the price of the bond is $878.40.

In case of any query, kindly comment on the solution.

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
BOND VALUATION Callaghan’s Motors’ bonds have 15 years remaining to maturity. Interest is paid semi-annually, they...
BOND VALUATION Callaghan’s Motors’ bonds have 15 years remaining to maturity. Interest is paid semi-annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yield to maturity is 8%. What is the bond’s current market price? BOND VALUATION Nungesser Corporation’s outstanding bonds have a $1,000 par value, a 9% semiannual coupon, 8 years to maturity, and an 8.5% YTM. What is the bond’s price? BOND VALUATION and YIELD TO MATURITY Suppose a 10-year, $1000 bond...
- Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 9 years...
- Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 9 years to maturity, and a 10% YTM. What is the bond's price? - A firm's bonds have a maturity of 10 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 5 years at $1,054.06, and currently sell at a price of $1,105.17. What are their nominal yield to maturity and their nominal yield to call?
Xanth Co. has 4.3% annual coupon bonds with face value of $1,000 and 7 years remaining...
Xanth Co. has 4.3% annual coupon bonds with face value of $1,000 and 7 years remaining until maturity. The bonds are priced to yield 7.3%. What is the present value of the bonds face value to be repaid at maturity (do not include the coupon payments)? Round your answer to two decimal places. (Please solve using N, I/Y, PV, PMT, and FV on a financial calculator)
Mouse, Inc.’s outstanding bonds have a $1,000 par value, and they mature in 5 years. Their...
Mouse, Inc.’s outstanding bonds have a $1,000 par value, and they mature in 5 years. Their yield to maturity in 9%, based on semiannual payments, and the current market price is $853.61. What is the bond’s annual coupon rate?
1. Nesmith Corporation’s outstanding bonds have a $1,000 par value, an 6% semiannual coupon, 12 years...
1. Nesmith Corporation’s outstanding bonds have a $1,000 par value, an 6% semiannual coupon, 12 years to maturity, and an 8% YTM. What is the bond’s price? a. $789.42 b. $849.28 c. $847.553 d. $1,304.94 2. A firm’s bonds have a maturity of 6 years with a $1,000 face value, have an 13% semiannual coupon, are callable in 2 years at $1,136, and currently sell at a price of $1,159.87. What is their nominal yield to call? a. 10.26% b....
Rocky Industries has a bond outstanding with 15 years to maturity, and 7% nominal coupon, semiannual...
Rocky Industries has a bond outstanding with 15 years to maturity, and 7% nominal coupon, semiannual payments, and a $1,000 par value.  The bond has a 5% nominal yield to maturity, but it can be called in 5 years at a price of $1,120.  What is the bond’s nominal yield to call? ?
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...
A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years.  The bond makes semi-annual coupon payments.  The bond’s yield to maturity is 9%.  In Excel, the =PV formula can be used to find the price of the bond.  Fill in the table with the appropriate values: RATE NPER PMT FV TYPE Repeat problem , but with annual coupon payments. RATE NPER PMT FV TYPE
Shimo Industries has a bond outstanding with 15 years to maturity, and 7% nominal coupon, semiannual...
Shimo Industries has a bond outstanding with 15 years to maturity, and 7% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 5% nominal yield to maturity, but it can be called in 5 years at a price of $1,120. What is the bond’s nominal yield to call? Show work.
Xanth Co. has 4.2% annual coupon bonds with face value of $1,000 and 5 years remaining...
Xanth Co. has 4.2% annual coupon bonds with face value of $1,000 and 5 years remaining until maturity. The bonds are priced to yield 6.0%. What is the present value of the bonds face value to be repaid at maturity (do not include the coupon payments)? (please solve using N, I/Y, PV, PMT, and FV on a financial calculator)
Xanth Co. has 5.7% annual coupon bonds with face value of $1,000 and 6 years remaining...
Xanth Co. has 5.7% annual coupon bonds with face value of $1,000 and 6 years remaining until maturity. The bonds are priced to yield 6.7%. What is the present value of the bonds coupon payments (do not include the repayment of face value at maturity)? (Please Solve using N, I/Y, PV, PMT and FV on a financial calculator)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT