Finance $\frac{3220002}{003}$ Spring $2024$ Final Exam $-$ Real Exam

$\frac{05}{16}\frac{?}{2022}$

points$)$ Present Value of Bond, i$.$e$.,$ Price of Bond

One of the England's largest corporations, who own the hair salon, "British Hairways" just expanded operations into the United States. At present, the firm has a $30-$year, $$10,000$ par value bond outstanding, with a coupon rate of $4\mathrm{.}3\%$ percent paid semiannually and $15$ years to maturity. The yield to maturity on this bond is $5\mathrm{.}2$ percent.

A$.$ What is the current value of the bond?

B$.$ Once you have calculated the Present Value or the current price of the bond, what would be the Current Yield on this bond?

C$.$ Is it selling at a discount, par, or premium?

D$.$ What is the difference between the concepts of Yield to Maturity, Current Yield, and Coupon Rate? Please compare$/$define each type of Yield$/$Rate$.$

Further Instructions:

Please include a timeline. Filling in or including all given information and relevant variables, such as $N,$ Semi$-$Annual Time Periods $($as long as you indicate semi$-$annual is the frequency$),$ I$/$Y$,$ Coupon PMT$,$ FV $($Face Value at Maturity or M$),($where the Present Value equals the current bond price$)$ PV is variable to be solved for, so PV$?$

Below is an example of a timeline for a bond, yet, similar to the other problems, feel free to use your own or work with this one, as it is in editable format in word. Thank you.

$\frac{\text{I}}{Y}=YTM\frac{\%}{2}$

$FV=$$$10,0000$

$PV=?$ PMT PMT PMT PMT PMT PMT PMT PMT PMT $+$ $$10,000($at maturity$)$

PVA$($PMTs$)$

$pV(M)+{?}_{?}$

Bond Price

PV of $[$Annuity of Equal Semi$-$Annual PMTs$]$

Face Value$]$

Discount and sum both PVs of all equal semi$-$annual payments plus face value at maturity.

If you solve by calculator $-$ please indicate you have done so$,$ while still including a timeline an general formula $($If you already have solved by both calculator and formula, you will receive additional credit$)$

$\backslash$table$[[$# pts$.,$Component$($no$.1)],[,$Timeline$],[,$General Formula$],[,$Calculations Steps$],[,$Answer$],[,\backslash$table$[[$Total Points $($of $25],[$pts$)]]]]$