A bond with a face value of $1,000 pays an annual coupon of 6% and has 5 years to maturity. If the current market interest rate is 4%, what is the approximate price of the bond?
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- What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)Assume a bond with a 10% annual rate has 8 years left to maturity when market rates are at 12%. Assume semi-annual payments. What is the price of the bond at 3 different points in time - today, in 1 year, and in 2 years. Is this a discount or premium bond, and what do you notice about the relationship between the price and maturity value (FV) over time?A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. Assume a face value of $1,000 and annual coupon payments.a) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time?b) What will be the rate of return on the bond? c) If the inflation rate during the year is 3%, what is the real rate of return on the bond? Assume annual interest payments.
- Consider a two-year bond with a face value $1000 and a coupon rate 4.2%paid annually.(a) On the market, the 2-year interest rate is 3%. What is the fair marketprice for this bond?(b) When the interest rate increases to 5%, what would the bond pricebecome?(c) What if the interest rate falls to 1%?A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. Assume a face value of $1,000 and annual coupon payments. 1) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? 2) What will be the rate of return on the bond? 3) If the inflation rate during the year is 3%, what is the real rate of return on the bond? Please show workings with formulas.Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.9%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ (Round to the nearest cent.)
- Suppose a 9-year bond has a face value of $1,000 and has a semi-annual YTM of 0.085. It pays semi-annual coupons of 8%. What is the bond’s price?A bond has a 25-year maturity, an 8% annual coupon paid semiannually, and a face value of p1,000. The going nominal annual interest rate (rd) is 6%. What is the bond’s price?Consider a bond that has a face value of $1,000. The bond has a maturity of 25 years and pays coupons of 5.5% per annum. If the bond's required rate of return is 8.0% per annum nominal, and coupons are received semi-annually, what is the current market price of the bond?
- A bond has the following features: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: 12 years What will the holder receive when the bond matures? Principal or All coupon payments? If the current rate of interest on comparable debt is 9 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Would you expect the firm to call this bond? Why? -Yes or No, since the bond is selling for a discount or premium? If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for twelve years if the funds earn 9 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. $A 15 year, semi-annual bond has a coupon rate of 4%. The YTM is 4%. What is the bond's duration and is it selling at a premium, par, or discount?A one-year bond currently pays 3.6% interest. It's expected that it will pay 3.1% next year and 2.0% the following year. The two-year term premium is 0.1% while the three-year term premium is 0.15%. What is the interest rate on a three-year bond according to the liquidity premium theory? O 3.00% O 1.15% O 3.05% O 2.9%
