Assuming semiannual compundingwith 15 years to maturity paying 1,000.00 at maturity for YTM of 7%, 11%, and 15% what is the price of a zero coupon bond for each YTM? Financial Calculator for 7%: n = 30, I/Y = 7%, CPT PV, PMT = 0, FV = 1000. Price = $131.37. Financial Calculator for 11%: n = 30, I/Y = 11%, CPT PV, PMT = 0, FV = 1000. Price = $43.68. Financial Calculator for 15%: n = 30, I/Y = 15%, CPT PV, PMT = 0, FV = 1000. Price = $15.10

Assuming semiannual compundingwith 15 years to maturity paying 1,000.00 at maturity for YTM of 7%, 11%, and 15% what is the price of a zero coupon bond for each YTM? Financial Calculator for 7%: n = 30, I/Y = 7%, CPT PV, PMT = 0, FV = 1000. Price = $131.37. Financial Calculator for 11%: n = 30, I/Y = 11%, CPT PV, PMT = 0, FV = 1000. Price = $43.68. Financial Calculator for 15%: n = 30, I/Y = 15%, CPT PV, PMT = 0, FV = 1000. Price = $15.10

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8P

See similar textbooks

Related questions

Q: You purchase a 30-year, zero-coupon bond for a price of $15. The bond will pay back $100 after 30…

A: The price of a zero coupon bond is equal to the present value of the maturity value of the bond. The…

Q: Direction: Solve for the following problems involving stocks and bonds 2 Find the amount of the…

A: Coupon Payment: It is the regular interest rate payable on a bond represented as a percentage of the…

Q: What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Assume that you wish to purchase a 30-year bond that has a maturity value of P1,000 and a coupon…

A: Maximum of the bonds = Present value of principal + Present value of interest payments where,…

Q: What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to…

A: Price of the bond is the present value of future cashflows

Q: What must be the price of a $10,000 bond with a 6.3% coupon rate, semiannual coupons, and ten years…

A: Price of the bond refers to the present value of all the intermediate earnings and the maturity…

Q: Consider the market rates for the maturities 1, 2, and 3 years respectively in the table below. What…

A: Bonds are financial instruments representing debt issued by a company or government to raise funds.…

Q: Find the nominal value and the time to redemption of 10 (the same) zero-coupon bonds, if they can be…

A: Bond Prices, Interest rates and time to maturity: Bond prices are sensitive to changes in interest…

Q: What is the approximate price of a bond that matures in two years (T= 2), with a face value of $1000…

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

Q: Suppose that 6-month, 12-month, and 18-month zero rates are 5%, 5.8% and 6.4% per annum with…

A: Par value of bond=$1000Coupon rate=7%Semi annual coupon6 month rate=5%12 month rate=5.8%18 month…

Q: You have estimated spot rates as follows: r₁ = 5.00%,r₂ = 5.40%,13 = 5.70%,14 = 5.90%,15 = 6.00%. a.…

A: The bond price in the current date can be the sum of the discounted value of all the coupons paid…

Q: Semiannual compounding, zero coupon bond with 15 years, maturity paying $1,000 at maturity if the:…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: How much would you be willing to pay for a $1,000 par value, 10-year bond with a 12.00% coupon…

A: Compound = Semiannually = 2Face Value = fv = $1000Time = t = 10 * 2 = 20Coupon Rate = c = 12 / 2 =…

Q: What must be the price of a $1,000 bond with a 6.5% coupon rate, annual coupons, and 20 years to…

A: Bond price is the sum of present value of all coupon payments and present value of face value. Bond…

Q: Suppose that the prices of zero-coupon bonds with various maturities are given in the following…

A: The forward rate of interest refers to the interest rate agreed upon today for a loan that will be…

Q: What must be the price of a $1,000 bond with a 5.8% coupon rate, annual coupons, and 15 years to…

A: Price / Present Value can be calculated using PV function in excelPV (rate, nper, pmt, [Fv],…

Q: How much will the coupon payments be of a 15-year $10,000 bond with a 6.5% coupon rate and…

A: Coupon rate semi annual= 6.5%/2= 3.25%

Q: 1. Consider a real return bond with a face value of $15,000 and a coupon yield of 5.2%. What is the…

A: Coupon payment after one year will be face value of bond multiply with adjusted coupon rate after…

Q: How much would you be willing to pay for a $1,000 bond that has a coupon rate of 7%, with 14 years…

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

Q: AT - Bill that is 225 days from maturity is selling for $98, 850. The T. Bill has a face - value of…

A: The face value of the T-Bill is $100,000.The selling price is $98,850.The maturity 225.

Q: You are considering. 15-year $1,000 par value bond. It's Coupon rate is 10% and interest is paid…

A: Here,ParticularsValuesFace value of the bond (FV) $1,000.00Time to maturity15.00Annual coupon…

Q: of 5%. Face value of the corporate bond Php. 1,500. can you compute the following? a. Annual…

A: The given problem can be solved using PV function in excel. PV function will compute present value…

Q: What is the value of a 15-year, $1000 par value, 1.5% coupon bond with annual payment if the…

A: Bond valuation is a way to determine the theoretical fair value (or par value) of a particular bond.…

Q: Suppose your firm issues a €100,000,000 5-year bond with a coupon rate of 8% per annum (assume…

A: Bonds are instruments issued by companies to raise debt from investors in place of traditional…

Q: What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to…

A: Bond value is the current worth of a bond on the basis of the present value of all the cash flows a…

Q: What is the YTM for a zero coupon bond ($1,000 par) maturing 18 months and 15 days from now selling…

A: We need to use the equation of time value of money (TVM) to solve the question. According to the…

Q: What are the Modified Duration and Macaulay Duration of the following bond? Coupon Rate = 8%…

A: Duration of bond shows the weighted period required to recover all cash flows from the bond. It is…

Q: A 2-year zero-coupon bond with $100 principal is trading at $95.00. Price of a 2-year coupon bond…

A: In this given question we, need to calculate the spot rate for a Zero coupon bond and the spot rate…

Concept explainers

Reasons for Estate Planning

Planning is a process that helps decide in advance about future activities and operations. Planning helps to draft the procedures by identifying, analyzing, and designing how to work, when to work, by whom should be done, and what has to be done. It is the primary step followed by a person, business organizations, institutions, companies, etc.

Question

Assuming semiannual compundingwith 15 years to maturity paying 1,000.00 at maturity for YTM of 7%, 11%, and 15% what is the price of a zero coupon bond for each YTM?

Financial Calculator for 7%: n = 30, I/Y = 7%, CPT PV, PMT = 0, FV = 1000. Price = $131.37.

Financial Calculator for 11%: n = 30, I/Y = 11%, CPT PV, PMT = 0, FV = 1000. Price = $43.68.

Financial Calculator for 15%: n = 30, I/Y = 15%, CPT PV, PMT = 0, FV = 1000. Price = $15.10.

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Trending now

This is a popular solution!

Step by step

Solved in 5 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

Calculate with Financial Calculator: Semiannual compounding, zero coupon bond with 15 years, maturity paying $1,000 at maturity if the: YTM is 7%, what is the price? = $362.45 YTM is 11%, what is the price (PV)? = $209.00 YTM is 15%, what is the price (PV)? = $141.33 My answers are incorrect. I need to understand what I am doing incorrectly on the FC.
You purchase a 30-year, zero-coupon bond for a price of $15. The bond will pay back $100 after 30 years and make no interim payments. The annual compounded return (geometric average return) on this investment is: OA. 6.2% OB. 7.83 % C. 5.55 % D. 6.53 %
What must be the price of a $2,000 bond with a 5.8% coupon rate, annual coupons, and 30 years to maturity if YTM is 9.9% APR? O A. $976.40 В. $1,708.70 С. $1,464.60 D. $1,220.50
What are the Modified Duration and Macaulay Duration of the following bond? Coupon Rate = 8% (Semi-annually paid) YTM = 9% Maturity = 2 Years Par Value = 1,000 (Hint: this question is similar to Example 1 and Example 2 on slides) ModD = 1.886 and MacD = 1.805 ModD = 1.784 and MacD = 1.954 ModD = 1.954 and MacD = 1.784 ModD = 1.805 and MacD = 1.886
What is the approximate price of a bond that matures in two years (T= 2), with a face value of $1000 (F= $1000), and an annual coupon payment of $50 (C = $50), if the interest rate is 6 percent? $1056.67 $1100.00 $876.33 $981.67
You have estimated spot rates as follows: r₁ = 5.00%,r₂ = 5.40%,r3 = 5.70%,r4 = 5.90%,15 a. What are the discount factors for each date (i.e., the present value of $1 paid in year t)? b. Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (1) 5%, two-year bond; (2) 5%, five-year bond; and (3) 10%, five-year bond. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (i) 5%, two-year bond; (ii) 5%, five-year bond; and (iii) 10%, five-year bond. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b-i. 5%, two-year bond b-ii. 5%, five-year bond b-iii. 10%, five-year bond $ Present Value 47.60 X = 6.00%. X < Required A Required B
What is the yield (on an annual basis) of a semiannual coupon bond that pays 4% coupon and has a par value of $1000, price of $920, and matures in 3 years? (Please use financial calculator and show the steps for which numbers you plugged into the financial calculator. Include N, I/Y, PV, PMT, FV, P/Y, etc)
Based on your risk assessment, you require an 8% rate of return on ZWT Inc. bond. The term-to-maturity is 20 years and the coupon rate is 59% paid semiannually. The YTM is 12%. What is the current market price of the bond? А. S703.11 В. $535.98 C. $473.38 D. $396.24 E. S834.54
Yield = 2.3% , price =$990.90, t=2
A firm's bonds have a maturity of 10 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 5 years at $1,054.36, and currently sell at a price of $1,104.71. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: % YTC: % What return should investors expect to earn on these bonds? Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.
How much would you be willing to pay for a $1,000 bond that has a coupon rate of 7%, with 14 years left until maturity, if the current market rate is 10% O $832.96 O $1,069.78 O $779.00 O $1,350.61
What is the answer ?