Years to Yield to Par Value Coupon Rate Maturity Maturity Price $5,000.00 11% 15 8% $1,000.00 12% 30 10% $1,000.00 6% 15 5% ? $1,000.00 8% 30 7% ?
Years to Yield to Par Value Coupon Rate Maturity Maturity Price $5,000.00 11% 15 8% $1,000.00 12% 30 10% $1,000.00 6% 15 5% ? $1,000.00 8% 30 7% ?
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 Prices**
Price the bonds from the following table with semiannual coupon payments:
**a.** Find the price for the bond in the following table: *(Round to the nearest cent.)*
| Par Value | Coupon Rate | Years to Maturity | Yield to Maturity | Price |
|-----------|-------------|-------------------|-------------------|-------|
| $5,000.00 | 11% | 15 | 8% | $ |
- **Par Value**: The bond's face value is $5,000.00.
- **Coupon Rate**: The annual coupon rate is 11%.
- **Years to Maturity**: The bond matures in 15 years.
- **Yield to Maturity**: The annual yield to maturity is 8%.
- **Price**: The price of the bond is to be calculated.
The table shows the necessary parameters to calculate the bond price with semiannual coupon payments.
Transcribed Image Text:### Bond Pricing Table
This table contains information about the characteristics of four different bonds. Each bond is described by its Par Value, Coupon Rate, Years to Maturity, Yield to Maturity, and the Price that needs to be determined.
| Par Value | Coupon Rate | Years to Maturity | Yield to Maturity | Price |
|-----------|-------------|-------------------|-------------------|-------|
| $5,000.00 | 11% | 15 | 8% | ? |
| $1,000.00 | 12% | 30 | 10% | ? |
| $1,000.00 | 6% | 15 | 5% | ? |
| $1,000.00 | 8% | 30 | 7% | ? |
- **Par Value**: The face value of the bond, or the amount the bondholder receives at maturity.
- **Coupon Rate**: The annual interest rate paid by the bond, expressed as a percentage of the Par Value.
- **Years to Maturity**: The number of years until the bond's maturity, when the Par Value is repaid.
- **Yield to Maturity**: The total return anticipated on a bond if it is held until it matures, expressed as an annual rate.
- **Price**: The current market price of the bond, which needs to be calculated.
This table aims to give an overview of the essential features that affect the pricing of bonds. Understanding these components helps in determining the market value and attractiveness of bonds for investment.
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