(Related to Checkpoint 9.3) (Bond valuation) Calculate the value of a bond that matures in 11 years and has a $1,000 par value. The annual coupon interest rate is 15 percent and the market's required yield to maturity on a comparable-risk bond is 14 percent. The value of the bond is $ (Round to the nearest cent.)

(Related to Checkpoint 9.3) (Bond valuation) Calculate the value of a bond that matures in 11 years and has a $1,000 par value. The annual coupon interest rate is 15 percent and the market's required yield to maturity on a comparable-risk bond is 14 percent. The value of the bond is $ (Round to the nearest cent.)

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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Calculate the yield to maturity (i.e., YTM) for the following bond. The bond matures in 28 years, has a coupon rate of 8.0% with semi-annual payments. The par value of the bond is $1000, while the current market value equals $1030.61. (Round to 100th of a percent and enter your answer as a percentage, e.g., 12.34 for 12.34%)
For a company, you plan to buy the following bond: Time to maturity, 6 years; coupon rate, 8%; Coupon payment, annual; Market interest rate, 8%; Face value, $1,000. Using Excel, calculate the duration of the bond. Using Excel, calculate the accumulated value of invested payment(or receipt) when you find market interest rate a year later is now 8%, 9%, and 7%, respectively. Using Excel, calculate geometric average rate of return (or realized compound return).
(Yield to maturity) A bond's market price is $825. It has a $1,000 par value, will mature in 6 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 12 years? What if it matures in 3 years? a. The bond's yield to maturity if it matures in 6 years is b. The bond's yield to maturity if it matures in 12 years is c. The bond's yield to maturity if it matures in 3 years is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)
A bond that matures in 9years has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent. A. What would be the value of this bond if it paid interest annually? (Round to the nearest cent) B. What would be the value of this bond if it paid interest semiannually? (Round to the nearest two decimnal places)
A 10-year bond has a coupon rate of 6.4% and pays coupons semi-annually. If the required return is 6.69%, how much should you be willing to pay for the bond today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. NOTE: All bonds have a par value of $1000 that is paid at maturity. Answer:
i. Calculate the value of Macaulay’s duration for a 10-year, $1000 par value bond purchased today at a yield to maturity of 14% and a coupon rate of 10%. ii. From the answer in (i) calculate the modified duration of the bond assuming the prevailing interest rate is still 14%.iii. Now suppose the market interest rate on comparable bonds falls to 13 percent. What will be the approximate percentage change in the bond price.? (Hint: use the modified duration for your computation in (ii))
Calculate the value of a bond that matures in 15 years and has $1,000 par value the annual interest rate is 11% and the market requires a yield to the maturity on a comparable risk bond is 15%. What is the value of the bond?
A bond currently trades at $1,153.72. It has a 12% annual coupon, paid semi-annually, and 15 years to maturity. What is the bond's yield to maturity?
A bond has a face value of £1,000, a 12% yield - to - maturity (APR), and 6 years to maturity. The bond has a 10% coupon rate and makes semi - annual payments. Compute the bond value.
A bond that matures in 1212 years has a $1 comma 0001,000 par value. The annual coupon interest rate is 1414 percent and the market's required yield to maturity on a comparable-risk bond is 1515 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?
a) A bond has 15 years left to maturity. The annual coupon rate is 9%, and face value is $1,000. If the YTM = 12%, what is the bond price? b) An annual coupon bond has coupon payment = $500, YTM =8%, and maturity = 5 years. If the price ofthe bond is $9,400, what must be the face value? c)A bond has 15 years left to maturity. The semi-annual coupon rate is 9%, and face value is $1,000. If the YTM = 12%, what is the bond price? for all 3 parts please show all calculations via excel, and how you got them in excel (formulas). thanks.
8. A bond has just been issued. The bond has an annual coupon rate of 12% and coupons are paid annually. The bond has a face value of $1,000 and will mature in 20 years. The bond’s yield to maturity is 14%. a.Using Excel’s Data Table feature to construct a Two-Way Data Table to demonstrate the impact of the coupon rate and the time to maturity on the bond’s duration using: i. Coupon Rates of 0%, 6%, 12%, and 18%.ii. Maturities of 5 years, 10 years, 15 years, and 20 years. b. What duration principles are demonstrated in this table? c.How could investors apply these duration principles to make bond investment decisions?

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