BOND PRICING. Find PBOND for each of the following $1000 par value bonds. Use a calculator to find the correct answers. Round to the nearest penny ($0.01). Example: 12% coupon (APR, compounded annually), matures in one year, r=12% 5. 12%APR 12% = 0.12 First, convert the coupon rate from APR to periodic rate: lyear уear Second, find the соиpon: Coupon - (СоuponRate)(Face) - (0.12)(1000) — 120 - С %3D (lyr)lyrs |= 1yr = T yr Third, find the relevant number of periods: Fourth, use bond pricing formula with the appropriate discount rate (here, 12%): T 1000 + 120 1000 C F 120 1120 PBOND = 1000 %3D (1 + r)' )' (1+r)" | (1.12)' (1.12)' 1.12 1.12 1.12 \t=1 12% coupon (APR, compounded quarterly), matures in one year, r=4% per quarter [Here, the discount rate is ready to use, while the coupon rate is still in its marketing-gimmick form.] b. а. 12% coupon (APR, compounded semi-annually), matures in two years, r=6% per 6 months

BOND PRICING. Find PBOND for each of the following $1000 par value bonds. Use a calculator to find the correct answers. Round to the nearest penny ($0.01). Example: 12% coupon (APR, compounded annually), matures in one year, r=12% 5. 12%APR 12% = 0.12 First, convert the coupon rate from APR to periodic rate: lyear уear Second, find the соиpon: Coupon - (СоuponRate)(Face) - (0.12)(1000) — 120 - С %3D (lyr)lyrs |= 1yr = T yr Third, find the relevant number of periods: Fourth, use bond pricing formula with the appropriate discount rate (here, 12%): T 1000 + 120 1000 C F 120 1120 PBOND = 1000 %3D (1 + r)' )' (1+r)" | (1.12)' (1.12)' 1.12 1.12 1.12 \t=1 12% coupon (APR, compounded quarterly), matures in one year, r=4% per quarter [Here, the discount rate is ready to use, while the coupon rate is still in its marketing-gimmick form.] b. а. 12% coupon (APR, compounded semi-annually), matures in two years, r=6% per 6 months

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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problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variables Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price?
Calculate (the present value of) the amount of interest excess or interest deficiency of the following bond: Par value: $100. Coupon rate 6.8%. Yield-to-maturity 6.5 %. The term of the bond is 5 years. Assume the bond pays interest twice a year, and semi-annual compounding. Express the amount of interest excess as a positive number and the amount of interest deficiency as a negative number. Round your answer to 2 decimal places. For example, if your answer is 25.689, please write down 25.69.
Bond prices. Price the bonds from the following table with quarterly coupon payments: Hint: Make sure to round all intermediate calculations to at least seven decimal places. a. Find the price for the bond in the following table: (Round to the nearest cent.) Years to Par Value $5,000.00 Data table Yield to (Click on the following icon in order to copy its contents into a spreadsheet.) Years to Par Value Coupon Rate Maturity Yield to Maturity Price $5,000.00 8% $5,000.00 12% $1,000.00 $1,000.00 10% 9% 5232 8% ? 7% ? 30 12% ? 9% ? Print Done - ☑
Required to show your work:Bond ABC：Coupon rate(%): 4.5% (annual payment)Current market:??Tenior:15 YearsSuppose the yield to maturity of bond E is 3.7% and face value equals to $1,000,calculate the current market price of bond ABC.
Zero-Coupon Bonds (ZCBS) with maturity in 1 and 5 years are available on the market. Their redemption value is £100, and they sell for £90 (1-year ZCB) and £84 (5-year ZCB). Find the spot rates corresponding to the ZCBs' prices 数字 i1 = % i5 数字 Enter a percentage correct to 2 decimal places % Calculate the forward rate 1,5 i1,5 数字 Enter a percentage correct to 2 decimal places %
Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a year. $19,000 bond with coupon rate 6% that matures in 4 years; current interest rate is 5% The purchaser should be willing to pay $ (Simplify your answer. Round to the nearest cent as needed.)
Calculate the purchase price of the following bonds. Indicate whether the bonds are priced at a discount, at par or at a premium. Give your answers in dollars and cents to the nearest cent. Face Value Coupon Rate Years to Maturity Market Rate a) $100 r = 6.75% 5 j2 = 6.75% b) $1,000 r = 8% 11 j2 = 6.25% c) $10,000 r = 7% 20 j2 = 8.75% Quoted coupon rates and market rates are nominal annual rates compounded semi-annually. a)Price = $ This bond is priced at:a discountpara premium b)Price = $ This bond is priced at:a discountpara premium c)Price = $ This bond is priced at:a discountpara premium
Consider a bond that is currently priced at $1100. If the face value of the bond is $1000, coupon payments are made semiannually, the bond matures in 5 years, and the YTM is 3%, what is the coupon rate? Group of answer choices 5.17% 2.58% 3.00% $25.84
Conceptual Overview: Explore the value of fixed-interest coupon bonds of different terms. This graph shows the value of 10% coupon bonds of different terms across differing market interest rates. Each bond pays INT = $100 at the end of each year and returns M = $1,000 at maturity. For comparison, the blue line depicts the value of a one-year bond. The term of the other bond in years may be changed using the slider. Drag on the graph to change the current market interest rate (rd) at which the bond (orange curve) is evaluated. ∑ t = 1 Y r s I N T ( 1 + r d ) + M ( 1 + r d ) = ∑ t = 1 1 5 $ 1 0 0 ( 1 + 0 . 1 0 0 ) + $ 1 0 0 0 ( 1 + 0 . 1 0 0 ) = 1 , 0 0 0 ∑ t=1 Yrs (1+r d ) t INT + (1+r d ) Yrs M =∑ t=1 15 (1+0.100) t $100 + (1+0.100) 15 $1000 =1,000 ∑t=1Yrs(1+rd)tINT+(1+rd)YrsM=∑t=115(1+0.000)t$100+(1+0.000)15$1000=2,500. 1. What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%? $421$708$1,000$1,5192. What is the value of a 12-year 10% $1,000…
Exploring Finance: Coupon Bonds. Coupon Bonds Conceptual Overview: Explore the value of fixed-interest coupon bonds of different terms. This graph shows the value of 10% coupon bonds of different terms across differing market interest rates. Each bond pays INT = $100 at the end of each year and returns M = $1,000 at maturity. For comparison, the blue line depicts the value of a one-year bond. The term of the other bond in years may be changed using the slider. Drag on the graph to change the current market interest rate (rd) at which the bond (orange curve) is evaluated. 5. For a 10%, $1,000 coupon bond, a longer term bond (say, 15 years) is: less affected by changes in the market rate than a 1-year bond. affected the same by changes in the market rate than a 1-year bond. more affected by changes in the market rate than a 1-year bond. Cannot be determined.
You purchase a bond with an invoice price of $1,014. The bond has a coupon rate of 9 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond? Enter the answer with 2 decimals (e.g. 954.23).
2. Finding the Yield to Maturity (I/Y) of bonds in the secondary market. Plug in the values in the formula, write the keys you enter in the Financial Calculator, and use Excel (formula and arguments). Use the Table below for each answer. a. A bond is currently traded at $850 in the secondary market. It matures in 7 years and has a coupon rate of 3%, paid semi-annually. Find the YTM (I/Y in the calculator) i. Is this a discount or premium bond? ii. Is YTM more or less than the Coupon Rate? iii. How are your previous two answers related? Explain. b. A bond is currently traded at $1350 in the secondary market. It matures in 7 years and has a coupon rate of 9%, paid semi-annually. (I/Y in the calculator) i. Is this a discount or premium bond? ii. Is YTM more or less than the Coupon Rate? iii. How are your previous two answers related? Explain. c. Describe the relationship between the YTM, the coupon rate, and the bond price.

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