6. 7. 8. Write the equation if you purchase a 6% $1000 coupon bond that pays interest every 3 months for $900 and matures in 1 year. If you want a YTM of 7% should you buy the bond (show work)? What is the present value of a $1000 coupon bond that pays 8% annual interest rate every 6 months and matures in 12 months? You are looking for a 10% yield to maturity (show work). What should be the price of a perpetuity that that pays $100 every month and you want a 12% annual rate of return?
6. 7. 8. Write the equation if you purchase a 6% $1000 coupon bond that pays interest every 3 months for $900 and matures in 1 year. If you want a YTM of 7% should you buy the bond (show work)? What is the present value of a $1000 coupon bond that pays 8% annual interest rate every 6 months and matures in 12 months? You are looking for a 10% yield to maturity (show work). What should be the price of a perpetuity that that pays $100 every month and you want a 12% annual rate of return?
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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Transcribed Image Text:6.
7.
8.
Write the equation if you purchase a 6% $1000 coupon bond that pays interest every 3 months
for $900 and matures in 1 year. If you want a YTM of 7% should you buy the bond (show work)?
What is the present value of a $1000 coupon bond that pays 8% annual interest rate every 6
months and matures in 12 months? You are looking for a 10% yield to maturity (show work).
What should be the price of a perpetuity that that pays $100 every month and you want a 12%
annual rate of return?
![you achieve your YIM?
To calculate PV or A use this equation: PV = A {(1/r) [1-1/(1+r)^n]},
A is payment per period, r is YTM per period, n is number of periods
Note that a 5%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa5da2dcc-f245-4504-82c4-fa8c684c7fa8%2Fbf232511-40c4-40da-ae54-6c1313c72f14%2Fc5a7fqx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:you achieve your YIM?
To calculate PV or A use this equation: PV = A {(1/r) [1-1/(1+r)^n]},
A is payment per period, r is YTM per period, n is number of periods
Note that a 5%
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