Bond value and time Changing required returns Personal Finance Problem Lymn Parsons is considering investing in either of two outstanding bonds. The bonds both have$1,000 par values and 12% coupon interest rates and pay annual interest. Bond A has exactly 6 years to maturity, and bond 8 has 16 years to maturitya. Calculate the present value of bond A if the required rate of return is (1) 9%, (2) 12 %, and (3) 15%.b. Calculate the present value of bond 8 if the required rate of retum is: (1) 9%, (2) 12%, and (3) 15%c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required retumsd. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why?COa (1) The value of bond A, if the required retum is 916, is $ (Round to the nearest cont.)

Bonds are debt instruments issued by companies. The company that issues a bond pays periodic coupons…

Bond value and time Changing required returns Personal Finance Problem Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 12% coupon interest rates and pay annual interest. Bond A has exactly 6 years to maturity, and bond B has 16 years to maturity & Calculate the present value of bond A if the required rate of retum is: (1) 9%, (2) 12%, and (3) 15% b. Calculate the present value of bond B if the required rate of retum is: (1) 9%, (2) 12%, and (3) 15% c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required Netums d. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why? a (1) The value of bond A it the required retum is 916, is $(Round to the nearest cont.)

Bond value and time Changing required returns Personal Finance Problem Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 12% coupon interest rates and pay annual interest. Bond A has exactly 6 years to maturity, and bond B has 16 years to maturity & Calculate the present value of bond A if the required rate of retum is: (1) 9%, (2) 12%, and (3) 15% b. Calculate the present value of bond B if the required rate of retum is: (1) 9%, (2) 12%, and (3) 15% c. From your findings in parts a and b, discuss the relationship between time to maturity and changing required Netums d. If Lynn wanted to minimize interest rate risk, which bond should she purchase? Why? a (1) The value of bond A it the required retum is 916, is $(Round to the nearest cont.)

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

Similar questions

Question A If you buy a bond today at a 90% discount and sell it at a 20% premium in year 12, what is your holding period return per year? Assume that it is a 25-year semi-annual bond and pays coupon of 11%. Answers with excel formulas will be appreciated Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line.
An investment firm recommends that a client invest in bonds rated AAA, A, and B. The average yield on AAA bonds is 4%, on A bonds 6%, and on B bonds 11%. The client wants to invest twice as much in AAA bonds as in B bonds. How much should be invested in each type of bond if the total investment is $28,000, and the investor wants an annual return of $1,740 on the three investments? Question content area bottom Part 1 The client should invest $enter your response here in AAA bonds, $enter your response here in A bonds, and $enter your response here in B bonds
If investors holding our 4-year bonds (Bond #1) receive interest income annually forfour years, plus the face value of the bonds at maturity,a. If the expected rate of return on our bonds is 10%, what is the duration ofBond #1? Given the following projected income stream for Bond #1: year coupon interest face value 1 100 2 100 3 100 4 100 1,000 total income in yeear 4 400 1,000
Please solve it in excel with Formulas explanation
Give typing answer with explanation and conclusion
Economics Corus Berhad is interested to invest in bonds. Currently, the financial manager is evaluating both Bond A and Bond B. Bond A pays 8 percent coupon semi-annually and matures in 12 years. Bond B pays 7 percent coupon annually having a maturity period of 13 years. Determine the value of each bond if the current market yield for both bonds is 8 percent.
User You are considering buying bonds in ACBB, Inc. The bonds have a par value of $1,000 and mature in 14 years. The annual coupon rate is 14.0% and the coupon payments are annual. The bond are currently selling $799.68 based on a yield to maturity of 18%. What is the bond expected capital gain/loss if the bond are held maturity’s ?
Use Given-Required-Solution in answering problems. Provide cash flow diagram. Write answer on the space provided below. Solution shall be uploaded at the end of the quiz. A bond with a face value of P1,500,000 is sold at P1,400,000. If the bond matures in 5 years and pays 15 percent per annum, how much should the annual earning interest be? Round off to four decimal places in the final answer/s.
Give typing answer with explanation and conclusion
solution
3. You own several bonds and as an astute investor, you keep track of your interest payments (also known as coupon payments or cash flows). Annually, you receive a fixed total of interest payments of $2,000 per year from these bonds for the next 5 years and your required rate of return is 7.5%. What is the current value of your bond investment? Show your work and explain your answer.
How much should an investor be willing to pay now for 10%, P 50, 000.00 bond that will mature in 25 years and pays interest semi-annually, if it wants to make 12% nominal interest compounded semi-annually on a bond investment Given: Required: Solution: refer to this textbook: https://drive.google.com/file/d/1h4ra80IE8IRtYyja16iK6TtjCrTDi73j/view?usp=sharing

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