DHL Corporation issues a 7% coupon interest rate bond with a maturity of 20 years.The face value of the bond, payable at maturity is $1000. The required rate of return on Del’s bond is 8% with interest being paid semi-annually.

DHL Corporation issues a 7% coupon interest rate bond with a maturity of 20 years.The face value of the bond, payable at maturity is $1000. The required rate of return on Del’s bond is 8% with interest being paid semi-annually.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...

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Question

DHL Corporation issues a 7% coupon interest rate bond with a maturity of 20 years.The face value of the bond, payable at maturity is $1000. The required rate of return on Del’s bond is 8% with interest being paid semi-annually.

2. Gwyneth has just purchased a bond for $1250 that has a maturity of 10 years and a Coupon rate of 8.5% paid annually. What is the YTM of the $1000 face value bond that she purchased?

i. Explain the relationship between the bond’s Yield to Maturity and Bond Price

ii. Identify the THREE (3) features of a bond

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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