Question

One year ago Dell sold 10 year $1000 par value semi annual coupon bonds at a price of $950.00 per bond. Market rate was 9 percent at the time. Today the market rate is 9.5 percent, therefore the bonds are currently selling:

a. at a discount

b. at a premium

c. at par

d. below market price

Answer #1

At the time of purchase

Maturity value of bond (FV) = $1000

No of annual coupon payments pending till maturity (N) = 10

Price of bond (PV) = -$950

Yield to maturity of bond (Y) = 9% p.a.

Amount of coupon (PMT) = ??

Using financial calculator or PMT function in excel,

Amount of coupon (PMT) = 82.21

Therefore coupon rate for bond = 82.21 /1000 = 8.22%

Current market rate for bond = 9.50%

**Since the market rate is more than coupon on bond, bond
must be trading at discount.**

**Therefore option (a) is correct**

One
year ago you purchases a 7 percent semi annual coupon bond with a
face value of $1000 and a yeild to maturity 6.8% when it was
selling for 102.5% of par. today you sold this bond the bond has
seven years to maturity and yeild to maturity of 5.2 percent what
is your total dollar return on this investment?

your firm has outstanding bonds with semi annual coupon payments
and a face value of $1000. the price today is $1075, the yield yo
maturity is 8% and the bonds mature in 15 years.
A) compute the annual coupon rate
B) compute the capital gains yield
C) is the bond a premium or discount? why?
D) if the bond price goes up, what will happen to the coupon
rate?

1. One year ago, a bond had a coupon rate of 9.78 percent, par
value of $1000, YTM of 7.12 percent, and semi-annual coupons.
Today, the bond’s price is 1,038.21 and the bond has 9 years until
maturity. What was the current yield of the bond one year ago? The
next coupon is due in 6 months. Answer as a rate in decimal format
so that 12.34% would be entered as .1234 and 0.98% would be entered
as .0098.

HW9 #2)
One year ago, a bond had a coupon rate of 11.1 percent, par
value of $1000, YTM of 5.42 percent, and semi-annual coupons.
Today, the bond’s price is 1,076.21 and the bond has 9 years until
maturity. What was the current yield of the bond one year ago? The
next coupon is due in 6 months. Answer as a rate in decimal format
so that 12.34% would be entered as .1234 and 0.98% would be entered
as .0098.

1) One year ago, ShopFast issued 15-year annual bonds at par.
The bonds had a coupon rate of 6.5 percent and had a face value of
$1,000. Today, the applicable yield to maturity to ShopFast’s bonds
is 7%. What was the change in price in ShopFast’s bonds from last
year to today? A) -55.56t B) 51.94 C) -$43.73 D) 58.71 E) The bond
price did not change.
2) WallStores needs to raise $2.8 million for expansion. The
firm wants to...

1. One year ago, a bond had a coupon rate of 10.5 percent, par
value of $1000, YTM of 7.96 percent, and semi-annual coupons.
Today, the bond’s price is 916.6 and the bond has 6 years until
maturity. What was the current yield of the bond one year ago? The
next coupon is due in 6 months. Answer as a rate in decimal format
so that 12.34% would be entered as .1234 and 0.98% would be entered
as .0098.

Twelve years ago (NPC) issued fifteen year 7.0% semi annual
coupon bonds each with a $1000 face value. Since then, interest
rates have generally fallen and the yield to maturity on the NPC
bonds is now 5.7%. What is the price today of the NPC bond?
Work by hand no financial calculator

A corporation made a coupon payment yesterday on its
11%-coupon, $1000 par value bonds that make semi-annual coupon
payments, and mature in 12 years. You purchased one of these bonds
5.5 years ago and, at the time, the yield to maturity on these
bonds was 6.49% (APR). If you sold your bond today for $576.13,
what APY did you earn on your investment in the bond? (In
percent with 3 decimals.)

One year ago, the ABC company issued 20-year bonds at par. The
bonds have a coupon rate of 5 percent and pay interest annually.
Today, the market rate of interest on these bonds is 5.6 percent.
How does today’s price of this bond compare to the issue price?
(Answer the percent price change)

One year ago, Alpha Supply issued 5-year bonds at par. The bonds
have a coupon rate of 6 percent and pay interest semi-annually.
Today, the market rate of interest on these bonds is 6.5
percent.
What is the price of these bonds today? $
Compared to the issue price, by what percentage has the price of
these bonds changed? %
(Use a negative to denote a decrease and a positive value to
denote an increase)

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