A government bond promises a risk-free payment of $5,000 in two years. The risk-free rate of interest is 3.25%. Calculate the current price of the bond.
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- Assume that a bond makes 30 equal annual payments of \$1,000$1,000 starting one year from today. (This security is sometimes referred to as an amortizing bond.) If the discount rate is 3.5\%3.5% per annum, what is the current price of the bond?Consider a fixed-payment security that pays P100 at the end of every year for the three years. If the rate of discount is 10 percent, the present value of the bond isA 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.
- Consider a fixed-payment security that pays $250 at the end of every year for eight years. If the rate of discount is 3 percent, calculate the present value of the bond. (Answer format is 4321)A security pays $55 in one year and $133.10 in three years. Present value of this security is $150. The relevant interest rate is %.Consider a bond that promises the following cash ows. The required discount rate is 12%. Year 0 1 2 3 4 Promised Payments 160 170 180 230 You plan to buy this bond, hold it for 2.5 years, and then sell the bond. a.What total cash will you receive from the bond after the 2.5 years? Assume that periodic cash ows are reinvested at 12%. b.Assuming all market interest rates are 12%, what is the duration of this bond?
- A bond promises to pay the bondholder equal payments of php 6000.00 in six month interval for 30 years. if the face amount is php 450000. What is the fair price of the bond ? Assume that market rate is 2% compounded annually?A 10-year government bond has a face value of £100 and an annual coupon rate of 5%. Assume that the interest rate is equal to 6% per year. (a) Calculate the bond’s present value if it pays the interest annually, and also the present value if it pays semi-annually. (b) Calculate the market price of the bond when the interest rate changes to 8% please explain it on a paper with formula, not by excel.Consider two bonds. Bond X has a face value of ₱100,000 and five years remaining to maturity. Bond Y has a face value of ₱100,000 and ten years remaining to maturity. Both bonds have the same stated rate of 12%. Which bond has the greatest interest rate risk? Provide a computation
- Bond A has the following terms: (Use semi- annual interest payments if applicable.) Coupon rate of interest: 10 percent Principle: $1,000 Term to maturity: 8 years Bond B has the following terms: (Use semi- annual interest payments if applicable.) Coupon rate of interest: 5 percent Principle: $1,000 Term to maturity: 8 years What should be the price of each bond if interest rates are 10 percent? What will be the price of each bond if, after five years have elapsed, interest rates are 10 percent? What will be the price of each bond if, after eight years have elapsed, interest rates are 8 percent?A bond promises to pay the bondholder equal payments of P6,000 in six-month intervals for 30 years. If the face amount is P450,000, what is the fair price of the bond? Assume that the market rate is 2% compounded annually.A 5-year government bond has a face value of £1,000 and an annual nominal couponrate of 8%. Assume that the relevant nominal market interest rate (annualized) is equalto 10%. The coupon payments are made quarterly.(a) Calculate the present value of the bond and the effective market interest rate.
