Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. What was the price of this bond when it was issued?
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. What was the price of this bond when it was issued?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity,
a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this
bond when it was issued was 6%. What was the price of this bond when it was issued?
Complete the steps below using cell references to given data or previous calculations. In some
cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a
column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel
function is to be used, the directions will specify the use of that function. Do not type in
numerical data into a cell or function. Instead, make a reference to the cell in which the data is
found. Make your computations only in the blue cells highlighted below. In all cases, unless
otherwise directed, use the earliest appearance of the data in your formulas, usually the Given
Data section.
Maturity (years)
10
Face value
1,000
Coupon rate
Yield to maturity
7%
6%
Coupon
Bond price
Transcribed Image Text:In cell D11, by using cell references, calculate the coupon payment of the bond
In cell D12, by using cell references, calculate the price of the bond when it was issued .
Note: The output of the expression or function you typed in this cell is expected as a
positive number.
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