Question

A $1,000 maturity value bond currently has 15 years left to maturity. The bond has an 8.5% coupon rate and pays interest annually.

a. If you want to earn a 7% rate of return, how much would you be willing

to pay today for this bond?

b. Suppose you buy the bond for the value you calculated in part a. After

holding the bond for 2 years and receiving 2 interest payments, you sell the bond for $1,032.43. What annual, compound rate of return have you earned over this 2

year period?

Please show/explain using excel

Answer #1

A $1,000 maturity value bond has 15 years left to maturity. The
bond has an 8.5% coupon rate and pays interest annually.
a. If you want to earn a 7% rate of return, how much would you
be willing to pay today for this bond?
b. Suppose you buy the bond for the value you calculated in part
a. After holding the bond for two years and receiving two interest
payments, you sell the bond for $1,032.43. What annual, compound...

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maturity pays a 5% coupon rate, paid semi-annually. What is the
value of the bond if your required rate of return is 5%?
3. A $1,000 par-value bond with 5
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A. A bond has a par value of $1,000, a time to
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intermediate calculations. Round your answer to 2 decimal
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*Mention the excel functions you used and the value of each
input you entered

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Question 9 options:
A)
9.42%
B)
9.12%
C)
8.96%
D)
8.74%
E)
9.04%

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