A bond has a par value of $1,000, 11 years to maturity, and a coupon rate...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A bond has a par value of $1,000, 11 years to maturity, and a coupon rate of 5 percent paid annually. What is the value of the bond if the market rate is 9 percent? What would the bond value be if the market rate was 8.5% with 15 years to maturity? Par = 1000 N = 11 Cr= 5% Mp = ? Ytm = 9% Pmt = 50 ytm: n=11, i/y=9, pv=?, pmt=50, fv-1000 mp = $727.79 ytm: n=15, i/y=8.5, pv=?, pmt-50, fv-1000 Mp = $709.35 A bond has a par value of $1,000, 11 years to maturity, and a coupon rate of 5 percent paid annually. What is the value of the bond if the market rate is 9 percent? What would the bond value be if the market rate was 8.5% with 15 years to maturity? Par = 1000 N = 11 Cr= 5% Mp = ? Ytm = 9% Pmt = 50 ytm: n=11, i/y=9, pv=?, pmt=50, fv-1000 mp = $727.79 ytm: n=15, i/y=8.5, pv=?, pmt-50, fv-1000 Mp = $709.35
Expert Answer:
Answer rating: 100% (QA)
To calculate the value of the bond we can use the present value formula which discounts the future ... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
Students also viewed these finance questions
-
1. Suppose a bond that has semiannual coupons is selling for $10,500. It has 7 years left until maturity. Its par value is $10,000 and its YTM is 7%. What is this bonds annual coupon rate? 2. If the...
-
Discuss these banks in the Philippines and the different types of services they offer to their clients? BPI Security Bank China Bank Metro Bank Union Bank
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
What's New 14 el.alphacollege.ca 500 Alpha College E-learning of My Courses Development is informal with a loner-term focus Select one: O True O False Training is formal with a short-term focus....
-
Do firms have any responsibilities to society at large? MINI CASE Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage...
-
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. A popular pastime among older Chinese men is to take their pet birds on daily...
-
Record the following transactions in the journal of Bingham Phone Accessories. Explanations are not required 2009 31 Dec 19 Received a $3,000, 60-day, 12% note on account from Arnold Collins. Made an...
-
Abe Factor opened a new accounting practice called X-factor Accounting and completed these activities during March 2014: Mar 1 Invested $50,000 in cash and office equipment that had a fair value of...
-
What is meant by a service factory? What features does Joseph have in mind for the new facility?
-
For this exercise, we use JTRAIN.RAW to determine the effect of the job training grant on hours of job training per employee. The basic model for the three years is hrsempit = (0 + (1td88t + (2d89, +...
-
Employees who have managers with Theory Y attitudes are just as unhappy with their jobs as employees who have managers with Theory X attitudes. T/F
-
As described in the case on New Belgium Brewing Company as well as in this chapters opening vignette, companies are coming up with creative ways to introduce fun into the workplace in order to...
-
A British Workplace Behavior Survey used a sample of 4,000 employees from four large organizations, and discovered three broad categories of ill-treatment at work. These included violence and injury...
-
Form a small group of four or five students and discuss your preference for the type of learning environment in which you can take a human resource management course for university credit and learn...
-
Visit the New Belgium Brewing Web site (www.newbelgium.com) to learn more about the company. The company has a strong culture that values environmental sustainability. Here are its core beliefs: We...
-
A company discovers that a poorly performing factory has a significant level of voluntary turnover compared to other locations. The company is not sure if it is a symptom of poor management or...
-
Analyze company A's 'profitability' and 'efficiency' for these years and consider industry averages. Return on asset (%) Return on equity (%) Net profit margin (%) Gross profit margin (%) Interest...
-
Determine the values of the given trigonometric functions directly on a calculator. The angles are approximate. tan 0.8035
-
What might an inverted yield curve suggest to the financial manager?
-
If you invest $8,000 per period for the following number of periods, how much would you have? a. 10 years at 5 percent b. 20 years at 9 percent c. 35 periods at 11 percent
-
Sharpe Razor Company has total assets of $2,500,000 and current assets of $1,000,000. It turns over its capital assets five times a year and has $700,000 of total debt. Its return on sales is 3...
-
The following questions relate to the use of computer-assisted audit techniques. Select the best response. a. Which of the following is true of generalized audit software packages? 1. They can be...
-
The following questions relate to the control risk assessment in computerized systems. Select the best response. a. In obtaining an understanding of a client's EDP controls, the auditor will...
-
On page 324 is a flowchart that depicts the payroll processing function of Campbell Company. Write your own word descriptions for each of the numbered blank symbols. C Supervisor Payroll department...
Study smarter with the SolutionInn App