Question: Consider a bond which pays 8% coupon semi-annually which has a face value of $10 , 000 and Has 7 years to maturity. The market

Consider a bond which pays8%coupon semi-annually which has a face value of$10,000and Has 7 years to maturity. The market requires an annual interest rate of12%on bonds of this risk What this bond's Price?

Step by Step Solution

★★★★★

3.58 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Manually Bond price is calculated as the sum of the present value of a series of cash flows which co... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

An enterprising student invests $1,000 at an annual interest rate that will grow the original investment to $2,000 in four years. In four more years, the amount will grow to $4,000, and this pattern...

Consider a $1000 investment at an annual interest rate of 6.5%, compounded quarterly. Find the balance after a. 10 years b. 20 years c. 30 years

A 10-year German government bond (bund) has a face value of 100 euros and an annual coupon rate of 5%. Assume that the interest rate (in euros) is equal to 6% per year. What is the bond's PV?

Cherry Inc. issues a 4-year default free bond which has a face value of $1 000 and pays a yearly coupon rate of 1000%.Given the YTM of zero-coupon bonds as below calculate the price of this bond?...

Consider a bond that has 1 year until maturity. The bond pays a coupon of 3% quarterly, has a face value of $10,000, and the yield to maturity for similar bonds is 5%. A.What are the duratio...

Consider a bond that has 1 year until maturity. The bond pays a coupon of 3% quarterly, has a face value of $10,000, and the yield to maturity for similar bonds is 5%. What are the duration, modified...

Consider a bond that has 5 years until maturity. The bond pays a coupon of 3% semi-annually , has a face value of $10,000, and the yield to maturity for similar bonds is 5%. A. What are the d...

Consider a bond that has 3 years until maturity. The bond pays a coupon of 3% quarterly, has a face value of $10,000, and the yield to maturity for similar bonds is 5%. a. What are the duration,...

Consider a bond that has 1 year until maturity. The bond pays a coupon of 3% quarterly, has a face value of $10,000, and the yield to maturity for similar bonds is 5%. What are the duration, mo...

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,870 for gasoline on these trips. His depreciation on the car if he was using it fully for...

Structural health monitoring (SHM) refers to the process of implementing a damage detection and characterization strategy for engineering structures. There are many SHM technologies available and...

lim ( x , y ) x 2 s i n 2 y x 2 2 y 2

dy + 2p dy + (p + q?)y = eax + pqx. Solve dx2 dx

b).Determine the differential equation by eliminating arbitrary constants and also write the order and 60, degree of the differential equation obtained. y = cx ++ (x3 7x2 + 27x 60 +e*

In Physical Disk Structure what parameters are used to read data from the disk? You are given a file of 2B size save it in a drive of size 500GB mention a number of sectors, blocks, clusters, and...

Create a list of at least 10 books (Title, Author, Price, Book_id) with the following functions: 1) Sequential insert in the list on the basis of Book_id 2) Sequential delete in the list and then...

Create a list of Employees (List can be as long as user wants). Program should save the following information for each Employee: Name, Emp. No., Experience, Designation and Salary. Now perform the...

E *praxis 5442 Middle School Science / Question 22 of 125 A rain shadow is a result of which of the following? Air masses losing moisture before they reach the leeward side of a mountain range Layers...

Frank?s Dogs has beginning net fixed assets of $480 and ending net fixed assets of $530. Assets valued at $300 were sold during the year. Depreciation was $40. What is the amount of capital spending?...

Problem 5: Consider a bond that pays no face value at the end of its life. It only pays growing coupons every year, at a growing rate of 5% each year. This security lasts for 4 years (i.e., makes 4...

Bonus Problem 2 (Optional, Harder, 45 marks) (a) (10 marks) We consider a bond that pays n coupons at the end of each coupon period. The length of each coupon period is T. The bondholder receives a...

14: Consider a bond that pays coupons semiannually. The face value is $1,000. The current bond price is $1,087. The coupon interest rate is 9%. The bond has 5 years left until maturity. What is this...

Consider a 5-year 3.2%-coupon bond that pays a $1,000 par value at maturity. What is the present value of the bond if it pays semi-annual coupons? Assume the appropriate discount rate is 8 percent?...

excel please Review Arial General B TUM HH M Merge & Center $ % 9 Coll Conditional Format Formatting as Table Styles Insert AB x fx C D E F H T J M N 0 Q PL B Consider a bond that pays $100 annual...