Question: Please show formulas P616 Bond valuation: Annual interest Calculate the value of each of the bonds shown in the following table, all of which pay

Please show formulas

P616 Bond valuation: Annual interest Calculate the value of each of the bonds shown in the following table, all of which pay interest annually.

Bond Par value Coupon interest rate Years to maturity Required return
A $1,000 14% 20 12%
B 1,000 8 16 8
C 100 10 8 13
D 500 16 13 18
E 1,000 12 10 10

Problem P6-16

A.

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

YTM

(Yield to Maturity or Required Rate fo Return)

Redemption

(Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency

(Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1)

Basis

(Always leave it blank)

Bond Price:

(The answer. But you need to multiply it by 10 to get the actual bond price.)

Multiply by 10

(Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price)

B.

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

YTM

(Yield to Maturity or Required Rate fo Return)

Redemption

(Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency

(Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1)

Basis

(Always leave it blank)

Bond Price:

(The answer. But you need to multiply it by 10 to get the actual bond price.)

Multiply by 10

(Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price)

C.

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

YTM

(Yield to Maturity or Required Rate fo Return)

Redemption

(Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency

(Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1)

Basis

(Always leave it blank)

Bond Price:

(Note: You will not multiply by 10 since the par value is $100)

Multiply by 10

D.

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

YTM

(Yield to Maturity or Required Rate fo Return)

Redemption

(Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency

(Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1)

Basis

(Always leave it blank)

Bond Price:

(The answer. But you need to multiply it by 10 to get the actual bond price.)

Multiply by 10

(Note: You will only multiply by 5 since the par value is $500)

E.

Settlement

(Think of Settlement as the beginning of the duration of the bond)

Maturity

(Think of Maturity as the end of the duration of the bond)

Rate

(Coupon Rate)

YTM

(Yield to Maturity or Required Rate fo Return)

Redemption

(Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.)

Frequency

(Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1)

Basis

(Always leave it blank)

Bond Price:

(The answer. But you need to multiply it by 10 to get the actual bond price.)

Multiply by 10

(Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
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!