Question

Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semi-annual interest payments. If you require a yearly 7.4% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

Group of answer choices

$1,262.11

$1,217.43

$1,126.76

$1,161.67

Answer #1

Information provided:

Face value= future value= $1,000

Coupon rate= 9.5%/2= 4.75%

Coupon payment= 0.0475*1,000= $47.50

Time= 20 years*2= 40 semi-annual periods

Yield to maturity= 7.4%/2= 3.70% per semi-annual period

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 1,000

PMT= 47.50

N= 40

I/Y= 3.70

Press the CPT key and PV to compute the maximum price of the bond.

The value obtained is 1,217.43.

Therefore, the maximum price of the
bond is **$1,217.43.**

Hence, the answer is **option
b.**

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require an 12.7% nominal yield to maturity on this investment,
what is the maximum price you should be willing to pay for the
bond?
a.
$901.80
b.
$674.76
c.
$1243.46
d.
$833.43
e.
$769.5

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require an 10.7% nominal yield to maturity on this investment,
what is the maximum price you should be willing to pay for the
bond?
a.
$874.74
b.
$721.44
c.
$1,000.99
d.
$901.80
e.
$910.81

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual
interest payments. If you require a 10.7% nominal yield to maturity
(YTM) on this investment, what is the maximum price you should be
willing to pay for the bond?
(Please show work and explain formula of how you got this answer
NOT on excel)

Assume that you are considering the purchase of a 20-year,
noncallable bond with an annual coupon rate of 9.5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require a 10.7% nominal yield to maturity (YTM) on this
investment, what is the maximum price you should be willing to pay
for the bond?
Please show how this problem can be solved without a financial
calculator.

Assume that you are considering the purchase of a 15-year bond
with an annual coupon rate of 9.5%. The bond has face value of
$1,000 and makes semiannual interest payments. If you require a 8%
nominal yield to maturity on this investment, what is the maximum
price you should be willing to pay for the bond?
Group of answer choices
925.28
961.57
1083.90
1,129.69
1040.72

Assume that you are considering the purchase of a 10-year,
noncallable bond with an annual coupon rate of 5%. The bond has a
face value of $1,000, and it makes semiannual interest payments. If
you require an 6% yield to maturity on this investment, what is the
maximum price you should be willing to pay for the bond?
Provide the correct excel function along with
inputs

assume that you were considering the purchase of a 20 year
non-callable bond with an annual coupon rate of 9.5% the bond has a
face value of $1000 and it makes semi annual interest payments. if
you require a 9.5% nominal yield to maturity on this investment
what is the maximum price you should be willing to pay for the
bond?

Assume that you are considering the purchase of a 14-year,
noncallable bond with an annual coupon rate of 7.70%. The bond has
a face value of $1000, and it makes semiannual interest payments.
If you require an 11.00% yield to maturity on this investment, what
is the maximum price you should be willing to pay for the bond?

Assume that you are considering the purchase of a 7-year bond
with an annual coupon rate of 4.5%. The bond has face value of
$1,000 and makes semiannual interest payments. If you require an
12.0% nominal yield to maturity on this investment, what is the
maximum price you should be willing to pay for the bond?

Apple, Inc’s 15-year bonds have an annual coupon rate of 11%.
Each bond has face value of $1,000 and makes semiannual interest
payments. If you require a 9.5% nominal yield to maturity on this
investment, what is the maximum price you should be willing to pay
for the bond? (2pts)
a. $1,063
b. $1,147
c. $1,119
d. $1,000

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 minute ago

asked 8 minutes ago

asked 11 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 27 minutes ago

asked 39 minutes ago

asked 42 minutes ago

asked 46 minutes ago

asked 50 minutes ago

asked 51 minutes ago

asked 1 hour ago