A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at a $75.25 discount from parvalue. The current yield on this bond is6.49%6%6.73%

Given Data: ParticularsValueInterest60Par value1000Maturity years5

Answered: A coupon bond that pays interest of $60…

A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at a $7 value. The current yield on this bond is 7% 6.49% 6% 573% count from par

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

See similar textbooks

Related questions

Q: A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and…

A: Annual current yield = (Annual coupon / Current bond price) x 100

Q: A bond pays semi-annual coupons of $50. What is the Current Yield of a bond selling for $900 with a…

A: Information Provided: Par value = $1000 Price = $900 Semi-Annual Coupon payment = $50

Q: An n-year bond with annual coupons has the following characteristics: . The redemption value at…

A: We have the select characteristics of the bond known. We have to find the missing value of n, the…

Q: Consider a bond with a 4% annual coupon and a face value of $1,000. Complete the following table.…

A: The given problem can be solved by using PV function of excel. Arguments of PV function :rate =…

Q: A 25-year, $1,000 par value bond has a 9.0% annual payment coupon. The bond currently sells for…

A: Bonds refer to instruments that are issued by a company to raise debt capital from non-traditional…

Q: "The current price of a 10-year, $1,000 par value bond is $1,182.58. Interest on this bond is paid…

A: To find the annual coupon rate, we need to use the bond pricing formula and solve for the coupon…

Q: A straight bond with a coupon rate of 8 percent sells at a yield to maturity of 9.57 percent. The…

A: Bond price is the discounted value of future cash flow from the bond including coupons and face…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: Par value of the bond is $1,000. Maturity is 10 years. Annual coupon payment is $70. Required…

Q: A bond with a face value of $300,000and semi-annual coupon of 5%matures in 3 years, It is offered at…

A: The cost of purchase of the bond can be calculated by multiplying face value with offered price.Cost…

Q: A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and…

A: Solution:Current yield refers to the percentage of annual coupon payment to the current price of…

Q: A ten-year bond that was issued two years ago (8 years left to maturity) has $1.000 face value with…

A: A bond is an instrument that represents the loan that is made by the investor to the company and…

Q: A company issues a callable (at par) five-year, 7% coupon bond with annual coupon payments. The bond…

A: Bond period = 5 yearsCoupon rate = 7 %Bond price = $110Par Value = $100Callable period = In one year…

Q: You own a $1,000 par value bond with 20 years to maturity that is paying an annual coupon rate of…

A: Price=Coupon Payment×1-1+YTM-nYTM+Face Value1+YTMn

Q: A bond has $1,000 face value, coupon rate of 7.3%, and yield to maturity (YTM) of 10.7%. It will…

A: A bond indicates a debt instrument that allows the issuer to raise funds from the public and also…

Q: A four-year bond has an 6 percent coupon rate and a face value of $1,000. If the current price of…

A: Yield to maturity is the percentage of return a bond can generate with the periodic and maturity…

Q: Yield to maturity The Salem Company bond currently sells for $1,213.45, has a coupon interest rate…

A: Given Data: Current Price 1213.45Coupon Rate15%Face Value1000Years (NPER)13

Q: A bond has nine years to maturity, a $1,000 face value, and a 5.5% coupon rate with annual coupons.…

A: YTM is also known as Yield to maturity. It is a capital budgeting technique which helps in decision…

Q: A bond with 18 years to maturity has an annual interest payment of $30. If the bond sells for its…

A: Let the face value be $1000 therefore price of the bond =$1000 using excel rate function current…

Q: A bond has a yield to maturity (YTM) of 5%, with a maturity of 30 years, the coupon payment is $25…

A: SEMI ANNUAL COMPOUNDING Yield to maturity Years (30*2) 60 coupon amount (PMT) 25 Face…

Q: A coupon bond that pays interest of $60 annually has a par value of $1000, matures in 4 years, and…

A: Working note:

Q: A four-year bond has an 4 percent coupon rate and a face value of $1,000. If the current price of…

A: Time = t = 4 YearsCoupon rate = c = 4%Face Value = fv = $1000Current Price of Bond = pv = $757.01

Q: A 15-year, 11% coupon bond with semi-annual payment and a par value of $1,000 may be called in 5…

A: Since you have asked a question with multiple parts, we will solve the first parts for you. Please…

Q: ed a bond 2 years ago for $985.43. Today the bond is priced at 794.27, and it matures in 6 years.…

A: present value of all the coupons and principal receipts discounted by YTM. Given Purchase price of…

Q: A bond has a $1,000 face value and a coupon interest rate of 7.55%. It has 5 years to maturity and…

A: Here,duration to maturity of bonds depends on initial price (that is the overall price paid at the…

Q: A 15-year, 6 percent coupon bond pays interest annually. The bond has a face value of $1,000. What…

A: Current price of bond is the price which can be paid for purchase of the bond. It is also called…

Q: A 25-year, $1,000 par value bond has a 9.0% annual payment coupon. The bond currently sells for…

A: Variables in the question:Par value=$1000Annual coupon rate=9%N=25 yearCurrent market…

Q: A 20-year bond with 8% annual coupons is purchased at a price of P. The face amount of the bond is…

A: 1. Coupon Rate:The coupon rate is the annual interest rate paid by the bond issuer to the…

Q: A bond with a 6% annual coupon matures in 5 years and has a price of $961. Compute the current…

A: Given data: annual coupon rate = 6% years to maturity = 5 price of bond = $961 face value of bond =…

Q: AEP's outstanding bonds have a $1,000 par value, and they mature in 25 years. The yield to maturity…

A: Semiannual coupon payment is calculated using PMT function in Excel :PMT(rate, nper, pv, [fv],…

Q: A corporate bond has a 10-year maturity and pays interest semiannually. The quoted coupon rate is…

A: Provided Data; 10-year Maturity; Semiannual Interest Payments- Rate of coupons: 6%- Priced at par…

Q: 2. A $1000 par bond has a 9% coupon and matures in 8 years. The bond is currently selling for…

A: A corporate bond refers to a bond issued by a corporation as a type of debt security that carries a…

Q: A $1,000 par value bond has coupon rate of 7% and the coupon is paid semi- annually. The bond…

A: The current price of bond will we an aggregate of present value of all future coupon payments and…

Q: A bond has nine years to maturity, a $2,000 face value, and a 6.5% coupon rate with annual coupons.…

A: To find the yield to maturity (YTM) for the bond, we need to solve for the interest rate r in the…

Q: Interest rates are equal to 6% for every maturity. A 3-year bond with face value $800 offers an…

A: Bonds are debt instruments issued by companies. The issuing company pays periodic interest or…

Q: A 25-year, $1,000 par value bond has an 8.5% annual coupon. The bond currently sells for $1,175. If…

A: Yield to maturity refers to the expected rate of return that an investor expects from the investment…

Q: A corporate bond has a face value of $1,000, and pays a $14 coupon semiannually (that is, the bond…

A: Variables in the question :Face value=$1000Coupon rate=2.8% (paid semi-annually)N=6…

Q: An Ordinary bond issued by Morgan Stanley matures in exactly 7 years and pays an annual coupon of…

A: Today’s quoted price for Morgan Stanley bond can be computed as follows:

Q: Footsteps Company has bond outstanding with a coupon rate of 6.4 percent and annual payments. The…

A: The yield to maturity indicates how much money you will get if you hold it until it matures. It…

Q: A 9 percent semiannual coupon bond matures in 8 years. The bond has a face value of $1,000 and a…

A: A bond is a type of debt securities issued by governments and private companies to raise funds from…

Q: Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Question

A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at a $75.25 discount from par
value. The current yield on this bond is
6.49%
6%
6.73%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Defining the Variables:

VIEW

Step 2: Calculation of current yield of bond

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A coupon bond that pays interest of 4% annually has a par value of $1,000, matures in 5 years, and is selling today at $785. The actual yield to maturity on this bond is Multiple Choice
A $1,000 par value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent coupon. The bond currently sells for $1,025. What is the yield-to-maturity? 6.17% 6.37% 6.34% 6.18% 6.28%
Bond A pays annual interest, has 6 percent annual coupons, $1,000 face value, and currently has 6 percent yields to maturity. The bond has 12 years to maturity. If the market rate of interest rises unexpectedly to 7 percent, what is the percentage change in the price of Bond A? A) -3.39% B) -5.73% C) -6.08% D) -7.94%
A 7% annual coupon bond has a maturity of three years and a yield to maturity on an annual basis of 8%. For the next two years, interest rates stay at 8% and thereafter they change to 7%. Which of the following is closest to the amount of reinvestment income on the bond to its final maturity if the par value of the holding is $1,000. A. $15.04B. $15.79C. $16.55
A bond has nine years to maturity, a $1,000 face value, and a 5.9% coupon rate with annual coupons. What is its yield to maturity if it is currently trading at $793.54? A. 13.14% B. 7.51% C. 11.26% D. 9.39%
For a 20-year $1000 par value 8% annual coupon bond that selling at a premium and makes semiannual coupon payments, what of the following is TRUE? O A. The YTM of this bond is below 8%. O B. The price of this bond is below its par value. O C. Because this bond is selling at a premium, it would be worth more than $1000 at maturity. O D. The bond pays $160 in interest every six months.
The Jupiter Dan Company has a bond outstanding that makes semiannual payments with a coupon rate of 9 percent. The bond sells for $982.4 and matures in 20 years. The par value is $1,000. What is the yield to maturity (YTM) of the bond? 4.60% 9.27% 9.19%. 18.33% 18.38%
A bond has nine years to maturity, a $2,000 face value, and a 5.7% coupon rate with annual coupons. What is its yield to maturity if it is currently trading at $1,566? OA. 13.13% OB. 11.25% OC. 9.38% OD. 7.5%
$1,000 par value bond sells for $1,092. It matures in 20 years, has a 10 percent coupon rate, and pays interest semi- annually. What is the bond's yield to maturity? 4.50% 9.30% 9.00 % 10.51 % 10.75 % There is not enough information provided to answer this question .
Consider a bond with a 6% annual coupon and a face value of $1,200. Complete the following table. (Enter your responses rounded to two decimal places.) Years to Yield to Maturity Maturity 4% 2 Cr W N N 2 2 3 5 5 6% 6% 4% 8% Current Price $ LA LA LA LA U $ $ $ $
You purchased a bond 2 years ago for $985.43. Today the bond is priced at 794.27, and it matures in 6 years. The bond provides a 9% coupon and pays interest semi-annually. Assuming a par value of $1,000, what is the current yield on this bond? Question 12 options: 12.46% 11.33% 10.88% 14.21% 10.31%
A bond has 10 years to maturity and has a $60 coupon. Current bonds yield 4%. What is the current value of this bond if this is a semi- annual bond? 953 1,000 1,080 1,163

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS