10-1Bond ValuationBuner Corp.'s outstanding bond has the following characteristics:Years to maturity6.0Coupon rate of interest8.0%Face value$1,000If investors require a rate of return equal to 12 percent on similar risk bondsand interest is paid semiannually, what should be the market price of Buner'sbond?

The question is based on the concept to calculate value of bond, which help in determination of fair…

Answered: 10-1 Bond Valuation Buner Corp.'s…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Part 1 Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1,000 and assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity 1 year 2 years 3 years 4 years 5 years Zero-Coupon Yields 4.00% 4.30% 4.50% 4.70% 4.80% a. What is the yield to maturity on this bond? b. If the yield to maturity on this bond increased to 5.20%, what would the new price be?
Maturity (years) Price 2.83% 5.79% The above table shows the price per $100-face value bond of several risk-free, zero-coupon bonds. What is the yield to maturity of the four-year, zero- coupon, risk-free bond shown? 2.85% 12.07% 1 $97.25 2.89% 3 2 $94.53 $91.83 5 4 $89.23 $87.53
Bond The effect of coupon rate (PMT) on interest rate sensiti 10-year, 10% annual coupor 10-year, 20% annual coupon 10-year, zero coupon 0 The effect of time to maturity on interest rate sensitivit 10-year, 15% annual coupon 5-year, 15% annual coupon Price @YTM-8% Price @YTM= 7% Percentage Change in price 1134.21 1210.66 6.74 463.2 508.3 9.74
31 ation An 8%, 8-year bond pays annual coupons and has 6 years to maturity. If the market interest rate is 9%, calculate the price of this bond. Show the (abbreviated) time line, the key entries/steps of FCS, and the (abbreviated) equation/expression of NS. Typing tips:
Bond Prices and Interest Rate Changes A 7.75 percent coupon bond with 18 years left to maturity is priced to offer a 7.25 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.5 percent. If this occurs, what would be the total return of the bond in percent? (Assume interest payments are semi-annual.) O 3.7% 4.9% 7.4% 7.5%
View Policies Current Attempt in Progress Carla Vista, Inc., has four-year bonds outstanding that pay a coupon rate of 7.0 percent and make coupon payments semiannually. If these bonds are currently selling at $921.69. What is the yield to maturity that an investor can expect to earn on these bonds? Assume face value is $1,000. (Round answer to 1 decimal place, e.g. 15.2%) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, eg. 15.2%) Effective annual yield. %
Question content area top Part 1 (Yield to maturity) A bond's market price is $1,200. It has a $1,000 par value, will mature in 12 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 24 years? What if it matures in 6 years? Question content area bottom Part 1 a. The bond's yield to maturity if it matures in 12 years is enter your response here%. (Round to two decimal places.) Part 2 b. The bond's yield to maturity if it matures in 24 years is enter your response here%. (Round to two decimal places.) Part 3 c. The bond's yield to maturity if it matures in 6 years is enter your response here%. (Round to two decimal places.)
Ch. 8. Calculating Yield to Market. Flowerpot Corp. has a bond outstanding with a coupon rate of 5.5 percent and annual payments. The bond currently sells for $919.81, matures in 11 years, and has a par value of $1,000. What is the YTM of the bond? Format as a percentage and round to two places past the decimal point as "X.XX"
Maturity (years) 1 2 3 4 5Zero-coupon YTM 4.6% 5.0% 5.4% 5.8% 6.1% What is the price today of two-year, default-free security with a face value of $1000 and an annual coupon rate of 6%? Does this bond trade at a discount, at par, or at a premium?

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