Roadside Markets has a 7.0 percent coupon bond outstanding that matures in 20 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 6.0 percent? $993.77 $1,059.83 $1,171.57 $1,000.98 $1,115.57

Roadside Markets has a 7.0 percent coupon bond outstanding that matures in 20 years. The bond pays interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 6.0 percent? $993.77 $1,059.83 $1,171.57 $1,000.98 $1,115.57

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: What is the present value of $1,800 per year, at a discount rate of 14 percent if the first payment…

A: Given Present value =$1800 Rate = 14% or 0.14 i = interest rate per period n = number of periods so…

Q: Suppose Asian Beauty, a Japanese and Korean style women’s cosmetics retail company in downtown…

A: Given that company issues $3000000 for 30 years, with 8% coupon payment.

Q: A zero-coupon bond is a bond that is sold for less than its face value (that is, it is discounted)…

A: Given that, Starting value = $ 8500 Ending value = $ 38000 Time period = 20 years Calculation…

Q: Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the coupon rate of…

A: Here we calculate the yield maturity by using the given information , so calculation as follow-

Q: Consider a coupon bond that has a par value of $1,000 and a coupon rate of 8%. The bond is currently…

A: Yield to maturity (YTM) is the total rate of return that will have been earned by a bond when it…

Q: 11. Two years ago, you bought a fifteen- year bond at its par value of P1,000. The coupon rate on…

Q: What is the yield to maturity on a $1000 face value discount bond manturing in 1 year that sells for…

A: Yield to maturity (i) can be calculated by using the following formula.

Q: A four-year bond has an 6 percent coupon rate and a face value of $1,000 . If the bond's current…

A: The yield to maturity of a bond is the total return an investor may expect to get if they hold the…

Q: Suppose a ten-year bond with a $10,000 face value pays a 5.0% annual coupon (at the end of the…

A: Given: The face value of the bond is $10,000 The annual coupon rate is 0.05(5%) Annual coupn…

Q: The interest rate for a bond is always equal to its yield to maturity

A: The interest rate can be defined as the amount of interest which is measured as a percentage of the…

Q: Your father invested a lump sum 24 years ago at 5.75 percent interest compounded monthly. Today, he…

A: Today's value of the investment = $105,099.24 Rate of interest =5.75 compounded monthly. We have to…

Q: Suppose Marcus eats nothing but burritos for dinner. He buys 30 burritos each month. During the last…

A: The initial price of burritos is $5.00 per burrito.Marcus income is fixed and it is equal to $150.…

Q: Using 12 percent simple interest per year, how much interest will be owed on a loan of $500 at the…

Q: What is the present value of $6,000 to be received 15 years from now if the interest rate is 15…

A: Present value is the value of investment in today's dollar.Future value is the value of investment…

Q: Suppose Ted deposits $10,000 in a savings plan earning 5% compounded annually and Tess deposits…

A: Effective interest rate is the actual interest rate earned on an investment. Effective interest…

Q: Harpeth Valley Water District has a bond outstanding with a coupon rate of 3.31 percent and…

A: The term market price refers to the amount of money for what an asset can be sold in a market. Here,…

Q: A zero-coupon bond is a bond that is sold for less than its face value (that is, it is discounted)…

A: Compound annual growth rate is a business and investing specific term for the geometric progression…

Q: which of the following bonds should you buy when interests rates are expected to go up? a) 5 year ,…

A: There is a more prominent probability that interest rate will rise (and subsequently adversely…

Q: 3. What is the yield to maturity of a 15% coupon bond selling for $900 that has a face value of…

A: Yield to maturity (YTM) refers to the internal rate of return (IRR) an investor will receive on a…

Q: Morris paid £500 a month for 20 years to pay off the mortgage on his Glasgow house. If his down…

A: Purchase price = Down payment + Total loan repaid, where Total loan repaid = Monthly loan repayment…

Q: Calculate the price of a zero-coupon bond that matures in 20 years if the market interest rate is…

A: We know that, The Price of a zero coupon bond = F / (1+i)n Where, F = Face value, i = Rate or yield…

Q: Consider a bond which has a face value of $2,000, a coupon of $50, and is known to have a yield to…

A: Face value of bond (F) = $2000Coupon = $50Yield to maturity =8%Term to maturity =5 yearsThe face…

Q: You invest $200 in a savings account paying an annual interest rate of 2 percent. How much will your…

A: Investment alludes to the designation of money, time, or resources with the assumption for creating…

Q: Assume a bond with a remaining maturity of 3 years a. If the face value is $10,000 and coupon…

A: Given Face value of coupon bond FV =$10000 Coupon payment (C)= $500 per year yield to maturity…

Q: A bond's yield is a periodic fixed payment made to a bondholder expressed as a percent of its face…

A: Bonds are fixed-income securities that simulate loans made by investors to borrowers. In a contract…

Q: Q2: If the present value of my investment $7000 and the rate of interest 5% what wil the value be in…

A: Present value of investment = $7000 Rate of interest =5% Time =8 years

Q: Appledale Dairy is considering upgrading an old ice-cream maker. Extensive upgrading costs $11650…

A: The present worth of a cash flow refers to its value at present worth based on its expected value in…

Q: he adjacent table presents annuity factors for various discount rates and payment periods up to 10…

A: PV = Where:PV = Present ValuePMT = Periodic payment (cash flow) amount = $80000r = Discount rate…

Q: A mortgage broker is offering a 20-year S185,900 mortgage. The borrower makes monthly payments on a…

A: The term mortgage refers to a loan used to purchase or maintain a home, land, or other types of real…

Q: A Treasury bond that settles on August 10, 2022, matures on August 3, 2027. The coupon rate is 4.3…

A: Part 2: Explanation:Step 1: Calculate the present value of the bond's cash flows.First, determine…

Q: What is the present value of the right to receive $11,000 in four years at an interest rate of 10.0…

A: Given information, Future value (F): $11,000 Time period (t): 4 years Interest rate (r): 10% To…

Q: Find the limiting value of Macaulay duration as maturity is increased to infinity of an 8% coupon…

A: Given: Yield = 8% Yield is paid semi-annually

Q: A $10,000 bond with a coupon rate of 1% and a yield of 2% will pay a yearly interest amount of:

A: Given the bond price = $10000 Coupon rate = 1% Yield = 2%

Q: f a coupon bond has two years to maturity, a coupon rate of 8%, a par value of $1000, and a…

A: Answer: Given, Coupon rate = 8% Par value = $1000 Yield to maturity = 12% Calculation:…

Q: Maturity (years) Zero-coupon YTM 1 4.00% 2 4.30% 3 5 4.50% 4.70% 4.80% Consider a five-year,…

A: An investor who made a loan to the borrower as a fixed-income security is referred to as a bond. If…

Q: Suppose Kay inherits $250,000, which she invests today at a rate of return of 9 percent compounded…

A: The final value of an interest-bearing investment such as demand deposits and debentures is the sum…

Q: What is the price of a two year bond with a 9% annual coupon and a yield to maturity of 8%?

A: Given Information : Annual Coupon (C) = 9% Yield to maturity (YTM) = 8% Assume Face value of Bond =…

Q: A corporate bond returns 12 percent of its cost (in present value terms) in the first year, 11…

A: Given that, A corporate bond return in first year = 12% or 0.12 A corporate bond return in second…

Q: How much must be deposited at the end of each year into an account that earns 4.0 percent interest…

A: Given information, Future value (F): $80,000 Interest rate (i): 4% Time period (N): 6 years To…

Q: What is the market price of a zero-coupon bond (that is, a bond that will not pay any coupon…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Question

Roadside Markets has a 7.0 percent coupon bond outstanding that matures in 20
years. The bond pays interest semiannually. What is the market price per bond if the
face value is $1,000 and the yield to maturity is 6.0 percent?
$993.77
$1,059.83
$1,171.57
$1,000.98
$1,115.57

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 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, economics and related others by exploring similar questions and additional content below.

Similar questions

Draw the cashflow diagram for each situation
Which of the following $1,000 face-value securities has the highest yield to maturity? A) a 5 percent coupon bond with a price of $600 B) a 5 percent coupon bond with a price of $800 C) a 5.25 percent coupon bond with a price of $1,200 D) a 5 percent coupon bond with a price of $120
Calculate the present value (price) of a discount bond with face value of $100, maturity of 5 years given yield to maturity is 5%. Round to two decimal places and do not enter a '$' sign. 78.35 (with margin: 0.02)
You own a 10-acre blueberry farm. You could farm the land yourself or rent it out for $7,000 per year. Another option is to sell the land this year at its current market price of $80,000. The price of the land next year will be $78,000. If you sell it, your group has an investment opportunity from which you expect to make a return of 6 percent per year. What is the opportunity cost to you of using the land to grow blueberries for a year? O a. $2,000 Ob. $4,800 Oc. $5,000 O d. $9,800
You own a 10-acre blueberry farm. You could farm the land yourself or rent it out for $7,000 per year. Another option is to sell the land this year at its current market price of $80,000. The price of the land next year will be $78,000. If you sell it, your group has an investment opportunity from which you expect to make a return of 6 percent per year. What is the opportunity cost to you of using the land to grow blueberries for a year? O a. $2,000 O b. $4,800 OC. $5,000 d. $9,800
Consider a bond with a face value of $2,000 that pays a coupon of $50 for 1 year (that is, you will receive both the face value and one coupon payment next year). Suppose the bond is purchased at $2,000. What is the yield to maturity of the bond? 2.5% 25% 1.025% 1.25%
A bond with a face value of $1,000 has 8 years until maturity, has a coupon rate of 8%, and sells for $1,100. What is the yield to maturity if interest is paid once a year? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places. What is the yield to maturity if interest is paid semiannually? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.
What should be the time to maturity, IN YEARS, of the bond that has 7.7% of coupon rate and has the yield to maturity of 10% if it sells for $868? show calculations 6.97 3.09 8.74 7.92 3.06
1. What is the present value of $500.00 to be paid in two years if the annual interest rate is 5%? $___ 2. The current interest rate on a 10-year treasury note (with face value = $100 and annual coupon rate = 2.625%) is 3.37%. The buyer of this note will receive $ ____ payment from the treasury every year before maturity while holding the bond.
If an initial investment of $1,000 is invested at 8% interest per year with continuous compounding, how much would be in the account after five years? A. $1,291.8 B. $1,481.6 C. $1,491.8 D. $1,391.9 What refers to the amount of a product made available for sale? A. Supply B. Demand C. Product D Good
Many retirement funds charge an administrative fee equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest $4,000 in the same stock this year. Alexx invests directly and earns 4% a year. Spenser uses a retirement fund and eams 3.75%. If Alexx and Spenser leave their investments in place for 30 years, with annual compounding of the interest, how much more will Alexx have than Spenser at the end of the 30-year period? Alexx will have more than Spenser after 30 years. (Enter your response rounded to two decimal places.)
Consider a 30-year US corporate bond paying 4.5% coupon. The bond is currently priced at $958. Find its yield to maturity. Express your answers as a percentage Please give correct answer sir