What is the market price of a $1,000, 5 percent bond paying a semiannual coupon if comparable market interest rates drop to 4 percent and the bond matures in 15 years? (Hint: Use Appendix A-2 and Appendix A-4.) Round Present Value of a Single Amount and Present Value of a Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest dollar.
What is the market price of a $1,000, 5 percent bond paying a semiannual coupon if comparable market interest rates drop to 4 percent and the bond matures in 15 years? (Hint: Use Appendix A-2 and Appendix A-4.) Round Present Value of a Single Amount and Present Value of a Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest dollar.
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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Transcribed Image Text:Bond Selling Price
What is the market price of a $1,000, 5 percent bond paying a semiannual coupon if comparable market interest rates drop to 4 percent and the bond matures in 15 years? (Hint: Use Appendix A-2 and Appendix A-4.) Round Present Value of a Single Amount
and Present Value of a Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest dollar.
Transcribed Image Text:Appendix A-2
n
1%
2%
3%
4%
14% 15%
5% 6%
0.9615 0.9524 0.9434
7%
0.9346
16% 17% 18% 19% 20%
0.8772 0.8696 0.8621 0.8547 0.8475 0.8403
1 0.9901 0.9804 0.9709
0.7695 0.7561 0.7432 0.7305
3 0.9706 0.9423 0.9151 0.8890 0.8638
0.8333
0.6944
0.5787
0.4823
0.4019
0.3349
0.9238 0.8885 0.8548
4 0.9610
5 0.9515
6 0.9420 0.8880
0.9057 0.8626 0.82 19
0.8375 0.7903
0.9327 0.8706 0.8131 0.7599
7
8
0.9235
0.9143
9
0.9053
0.8963
12 0.8874
13 0.8787
14 0.8700
0.8613
0.8528
17 0.8444
15
16
8% 9% 10% 11% 12% 13%
0.9259 0.9174 0.9091 0.9009 0.89 29 0.8850
2 0.9803 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831
0.7182 0.7062
0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.71 18 0.6931 0.6750 0.6575 0.6407 0.6244 0.6086 0.5934
0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.63 55 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.4987
0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.54 28 0.5194 0.4972 0.4761 0.4561 0.4371 0.4190
0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323 0.4104 0.3898 0.3704 0.3521
0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251
0.3996 0.3759
0.3538 0.3332 0.3139 0.2959 0.2791
0.8535 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269 0.3050 0.2848 0.2660 0.2487 0.2326
0.8368 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938
0.8203 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615
0.8043 0.7224 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.2875 0.2607 0.2366 0.2149 0.1954 0.1778 0.1619 0.1476 0.1346
0.7885 0.7014 0.6246 0.5568 0.4970 0.4440 0.3971 0.3555 0.3186 0.2858 0.2567 0.2307 0.2076 0.1869 0.1685 0.1520 0.1372 0.1240 0.1122
0.7730 0.6810 0.6006 0.5303 0.4688 0.4150 0.3677 0.3262 0.2897 0.2575 0.2292 0.2042 0.1821 0.1625 0.1452
0.7579 0.6611 0.5775 0.5051 0.4423 0.3878 0.3405 0.2992 0.2633 0.2320 0.2046 0.1807 0.1597 0.1413 0.1252
0.7430 0.6419 0.5553 0.4810 0.4173 0.3624 0.3152 0.2745 0.2394 0.2090 0.1827 0.1599 0.1401 0.1229 0.1079
0.7284 0.6232 0.5339 0.4581 0.3936 0.3387 0.2919 0.2519 0.2176 0.1883 0.1631 0.1415 0.1229 0.1069 0.0930
0.7142
0.3166 0.2703 0.2311 0.1978 0.1696 0.1456 0.1252 0.1078 0.0929 0.0802
0.7002
0.2959 0.2502 0.2120 0.1799 0.1528 0.1300 0.1108 0.0946 0.0808 0.0691
0.1945 0.1635 0.1377 0.1161 0.0981 0.0829 0.0703 0.0596
0.2145 0.1784 0.1486 0.1240 0.1037 0.0868 0.0728 0.0611 0.0514 0.0433
0.1987 0.1637 0.1351
0.1117
0.0926 0.0768 0.0638 0.0531
0.0443 0.03 70
0.1502 0.1228 0.1007 0.0826
0.0680 0.0560 0.0462 0.0382 0.03 16
0.1117 0.0907 0.0738 0.0601 0.0491 0.0402 0.03 29 0.0270
0.2470 0.1971 0.1577 0.1264 0.1015 0.0817 0.0659 0.0532 0.0431 0.0349 0.0284
0.0231
0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 0.0588 0.0471 0.0378 0.0304 0.0245 0.0197
0.2198 0.1722 0.1352 0.1064 0.0839 0.0663 0.0525 0.04 17 0.0331 0.0264
0.2074 0.1609 0.1252 0.0976 0.0763 0.0597 0.0469
0.0230 0.0182 0.0144
0.1956 0.1504 0.1159 0.0895 0.0693 0.0538 0.0419 0.03 26 0.0255 0.0200 0.0157 0.0123
0.1846 0.1406 0.1073 0.0822 0.0630 0.0485 0.0374 0.0289 0.0224 0.0174 0.0135
0.1741 0.1314 0.0994 0.0754 0.0573 0.0437 0.0334 0.0256 0.0196 0.0151 0.0116
0.0972 0.0668 0.0460 0.0318 0.0221 0.0154 0.0107 0.0075 0.0053 0.0037 0.0026
0.0543 0.0339 0.0213 0.0134 0.0085 0.0054 0.0035 0.0022 0.0014 0.0009 0.0006
0.0541
0.1299 0.1163 0.1042 0.0935
0.1110 0.0985 0.0876 0.0779
0.0949 0.0835 0.0736 0.0649
0.0811 0.0708 0.06 18
0.0693 0.0600 0.0520
0.0592 0.0508 0.0437
0.0506 0.0431 0.0367
0.0365
0.0309
0.0451
0.6050 0.5134 0.4363 0.3714
0.5874
0.5703
18 0.8360
0.0376
19 0.8277
0.6864
0.4936 0.4155 0.3503
0.4746 0.3957 0.3305 0.2765 0.2317
0.3769
0.2584
20 0.8195
0.6730
0.5537
0.3118
0.0308
0.4564
0.4388
21 0.8114
0.5375
0.2942
0.2415
0.6598
22 0.8034 0.6468
23 0.7954 0.6342 0.5067
0.5219
0.42 20
0.2775
0.2257
0.1839
0.0262
0.4057
0.3256
0.2618
0.2109
0.1703 0.1378
0.0222 0.0183
0.0188 0.0154
0.0160 0.0129
0.0211 0.0169 0.0135 0.0109
0.0115 0.0091
0.0097 0.0077
0.0369
24 0.7876 0.6217 0.4919 0.3901 0.3101
25 0.7798 0.6095 0.4776 0.3751 0.2953
26 0.7720 0.5976 0.4637 0.3607 0.2812
27 0.7644 0.5859 0.4502 0.3468 0.2678
0.7568 0.5744 0.4371 0.3335 0.2551
0.7493 0.5631 0.4243 0.3207 0.2429
0.7419 0.5521 0.4120 0.3083
0.6717
0.2083
50 0.6080 0.3715 0.2281 0.1407
0.0291
28
29
30
0.2314
0.0105 0.0082 0.0064
0.0090 0.0070 0.0054
0.0019 0.0013 0.0010
0.0004 0.0003 0.0002
40
0.4529 0.3066
0.1420
0.0872
Present Value of a Single Amount ($1) (Used to Compute the Discounted Present Value of Some
Known Future Single Lump Sum)
10
11
0.3589
0.3418
0.0259
0.0218
0.0313
0.0261
0.0217
0.0181
0.0151
0.0126
0.0105
0.0087
0.0073
0.0061
0.0051
0.0042
0.0007
0.0001
Expert Solution
Given,
Par Value = $1,000
Time Period = 15 Years
Coupon Rate = 5% (Semi-annual)
Yield = 4%
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