Question: PLEASEEE HELP, i will up vote thank you so much (Bond valuation) You own a bond that pays $100 in annual interest, with a $1.000


PLEASEEE HELP, i will up vote thank you so much
(Bond valuation) You own a bond that pays $100 in annual interest, with a $1.000 par value. It matures in 10 years. Your required rate of retum is 11 percent a. Calculate the value of the bond. b. How does the value change if your required rate of return (1) increases to 15 percent or (2) decreases to 8 percent? c. Explain the implications of your answers in part b as they relate to interest rate risk, premium bonds, and discount bonds d. Assume that the bond matures in 5 years instead of 10 years. Recompute your answers in part b. e. Explain the implications of your answers in part d as they relate to interest rate risk, premium bonds, and discount bonds. a. If your required rate of return is 11 percent, what is the value of the bond? (Round to the nearest cent.) b. What is the value of the bond if your required rate of return increases to 15 percent? (Round to the nearest cent.) What is the value of the bond if your required rate of return decreases to 8 percent? (Round to the nearest cent.) by contrast, an increase c. Based on the answers in part b, a decrease in interest rates (the required rate of return) will cause the value of a bond to in interest rates will cause the value to (Select from the drop-down menus.) Also, based on the answers in part b, if the required rate of return (current interest rate): (Select from the drop-down menus.) 1. Equals the coupon interest rate, the bond will sell at (Bond valuation) You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 10 years. Your required rate of return is 11 percent a. Calculate the value of the bond b. How does the value change if your required rate of retum (1) increases to 15 percent or (2) decreases to 8 percent? c. Explain the implications of your answers in part b as they relate to interest rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 10 years. Recompute your answers in part b. e. Explain the implications of your answers in part d as they relate to interest rate risk, premium bonds, and discount bonds. 2. CAUGUS LIU ULIVU wupun iac, u LORTU W sulla 3. Is less than the bond's coupon rate, the bond will sell at d. Assume the bond matures in 5 years instead of 10 years What is the value of the bond if your required rate of retum is 11 percent? (Round to the nearest cent.) What is the value of the bond if your required rate of return increases to 15 percent? S (Round to the nearest cent.) What is the value of the bond if your required rate of return decreases to 8 percent? (Round to the nearest cent.) Vinterest rate risk than one owning a short-term e. From the findings in part d, we can conclude that a bondholder owning a long-term bond is exposed to bond. (Select from the drop-down menu.)
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