Question

Missing information on a

bond.

Your broker faxed to you the following information about two

quarterlyquarterly

coupon

LOADING...

bonds that you are considering as a potential investment. Unfortunately, your fax machine is blurring some of the items, and all you can read from the fax on the two different bonds is the following:

LOADING...

. Fill in the missing data from the information that the broker sent.

What is the price of the IBM coupon bond?

(Click on the following icon

in order to copy its contents into a spreadsheet.)

Features |
IBM Coupon Bond |
AOL Coupon Bond |
||

Face value (Par
LOADING... ) |
5,000 |
1,000 |
||

Coupon rate
LOADING... |
8.5% |
? |
||

Yield to maturity
LOADING... |
9.5% |
11.5% |
||

Years to maturity
LOADING... |
20 |
30 |
||

Price |
? |
537.68 |

Answer #1

Calculation of price of IBM coupon bond:

FV = 5000

PMT = 5000 * 8.5% = 425

Rate = 9.5%

Nper = 20

Price of the bond can be calculated by using the following excel
formula:

=PV(rate,nper,pmt,fv)

=PV(9.5%,20,-425,-5000)

= $4,559.38

**Price of IBM coupon bond = $4,559.38**

Calculation of coupon rate:

FV = 1000

Rate = 11.5%

Nper = 30

PV = 537.68

Coupon payment can be calculated by using the following excel
formula:

=PMT(rate,nper,pv,fv)

=PMT(11.5%,30,-537.68,1000)

= $59.72

Coupon rate = coupon payment / face value

= $59.72 / 1000

= 5.97%

**Coupon rate of AOL coupon bond =
5.97%**

Your broker faxed to you the following information about two
annual coupon bonds that you are considering as a potential
investment. Unfortunately, your fax machine is blurring some of
the items, and all you can read from the fax on the two different
bonds is the following:
Features IBM Coupon Bond AOL Coupon Bond
Face value $1,000 $5,000
Coupon rate 10.5% ?
Yield to maturity 11.5% 5.5%
Years to maturity 30 25
Price ? $5,335.35

A broker specializing in bonds has offered you $100,000 bond
with a 10 year maturity and a 10% semi annual coupon at an 8% yield
to maturity what is the price of the bond?

Your broker offers you the opportunity to purchase a bond with
coupon payments of $90 per year and a face value of $1,000. If the
yield to maturity on similar bonds is 8%, this bond should: A) Sell
for the same price as the similar bond regardless of their
respective maturities. B) Sell at a premium. C) Sell at a discount.
D) Sell for either a premium or a discount but it's impossible to
tell which. E) Sell for par...

•You would like to invest in bonds. Your broker suggests two
different bonds. The first bond, issued by Trust Media, will mature
in 2019. Its price is quoted at $962.10 and it pays a 5.7% coupon.
The second bond suggested, issued by Abalon, Inc., also matures in
2019. This bond’s price is $1,019.40 and pays a 5.375% coupon. To
help you decide between the bonds, you want to know:
1.How much money it will cost to buy 10 bonds,
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For a given term structure, you are given the following
information about two bonds that are re-
deemable at par and have face amount $100, and coupons payable
semi-annually.
Bond 1: Coupon rate 4% per year, price $85.12
Bond 2: Coupon rate 10% per year, price $133.34
Find the yield-to-maturity for a 10-year zero coupon bond.

Your broker is offering you a bond at a price of 107% with an
annual coupon of 7% which matures in 14 years.
1.What is its yield to maturity? (FORMAT: X.XX DO NOT SHOW
PERCENTAGE SIGN)
2.What is this bond's current yield? (FORMAT: X.XX DO NOT SHOW
PERCENTAGE SIGN.)

Bond
valuation l—Semiannual
interest Calculate the value of each of the
bonds shown in the following table, all of which pay interest
semiannually. (Click on the icon located on the
top-right corner of the data table below in order to copy its
contents into a spreadsheet.)
Bond
Par Value
Coupon
interest rate
Years to
maturity
Required stated
annual return
A
$1 comma 0001,000
77
%
1111
77
%
B
1 comma 0001,000
1313
2020
1111
C
100100
1616
55
1313

You are given the following information about two annual- coupon
bonds, each with a face and redemption value of $1,000 and each 3
years in length:
- Bond A: A 3- year 6% annual coupon bond with a price of
$955.57.
- Bond B: A 3- year 8% annual coupon bond with a price of
$1,008.38.
Using this data, find the annual yield on a 3- year zero- coupon
bond.

a) You are considering investing in bonds and have collected the
following information about the prices of a 1-year zero-coupon bond
and a 2-year coupon bond.
- The 1-year discount bond pays $1,000 in one year and sells for
a current price of $950.
- The 2-year coupon bond has a face value of $1,000 and an
annual coupon of $60. The bond currently sells for a price of
$1,050.
i) What are the implied yields to maturity on one-...

A bond trader bought each of the following bonds at a yield to
maturity of 8 percent. Few weeks after the purchase of the bonds,
interest rates fell to 7 percent.
Maturity
Coupon
Price at 8%
Price at 7%
Percentage Change
10-year
10% annual coupon
10-year
zero
5-year
zero
30-year
zero
$100
perpetuity
Required: Complete missing information int he above table

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