A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline.

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 6, Problem 1P

A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments.

a. What is the coupon payment for this bond?
b. Draw the cash flows for the bond on a timeline.

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

b.

Expert Solution

Summary Introduction

To determine: The cash flows of the bond on a timeline.

Explanation of Solution

Cash Flow Timeline:

EBK CORPORATE FINANCE, Chapter 6, Problem 1P

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Consider a 25-year bond with a face value of $1,000 that has a coupon rate of 5.8%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ *** (Round to the nearest cent.)

Consider a 20-year bond with a face value of $1,000 that has a coupon rate of 5.7%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. (Round to the nearest cent.)

Assume that a bond will make payments every six months as shown on the following timeline (using six- month periods): Period Cash Flows a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? $19.36 2 $19.36 CHE a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) 19 $19.36 20 $19.36+ $1,000

Answer 2

Textbook Question

Chapter 6, Problem 1P

A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments.

a. What is the coupon payment for this bond?
b. Draw the cash flows for the bond on a timeline.

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

b.

Expert Solution

Summary Introduction

To determine: The cash flows of the bond on a timeline.

Explanation of Solution

Cash Flow Timeline:

EBK CORPORATE FINANCE, Chapter 6, Problem 1P

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 6, Problem 1P

A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments.

a. What is the coupon payment for this bond?
b. Draw the cash flows for the bond on a timeline.

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

b.

Expert Solution

Summary Introduction

To determine: The cash flows of the bond on a timeline.

Explanation of Solution

Cash Flow Timeline:

EBK CORPORATE FINANCE, Chapter 6, Problem 1P

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 6, Problem 1P

A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments.

a. What is the coupon payment for this bond?
b. Draw the cash flows for the bond on a timeline.

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

b.

Expert Solution

Summary Introduction

To determine: The cash flows of the bond on a timeline.

Explanation of Solution

Cash Flow Timeline:

EBK CORPORATE FINANCE, Chapter 6, Problem 1P

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

b.

Expert Solution

Summary Introduction

To determine: The cash flows of the bond on a timeline.

Explanation of Solution

Cash Flow Timeline:

EBK CORPORATE FINANCE, Chapter 6, Problem 1P

Answer 8

Expert Solution

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.

Answer to Problem 1P

The Coupon Payment on a Bond is $27.50.

Explanation of Solution

Determine the coupon payment on a bond

The bond is paid on semi-annual basis.

Coupon Payment=[(Face Value×Coupon Rate)2]=[($1,000×5.50%)2]=[$552]=$27.50

Therefore, the coupon payment on a bond is $27.50.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Summary Introduction

a.

To determine: The coupon payment on a bond.

Introduction:

Yield to maturity (YTM) is the rate of return projected for a security or a bond, which is apprehended until its maturity period. It is also considered as the internal rate of return (IRR) for a security or bond and it likens the current estimation of bond’s future cash flow to its present market cost. Coupon rate is expressed as an interest rate on a fixed income security like a bond. It is also called as the interest rate that the bondholders receive from their investment. It depends on the yield as of the day when the bond is issued.