A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%. a) What is the interest payment you should receive each year? b) What is the selling price of the bond?
Q: A firm has issued a bond that has a coupon of 11%, semi-annual payments, a required return of 14%,…
A:
Q: A corporate bond has a face value of $1 000, a coupon rate of interest of 10.5% per annum, payable…
A: i. Coupon amount = Face value * Coupon rate Coupon amount = $1000 * 10.5%/2 Coupon amount = $52.50
Q: Assume that a company issued a bond with $1,000 face value, 10% coupon rate, 20 years maturity, if…
A: Face Vale = 1000 Coupon = Coupon Rate × Face Value = 10 × 1000 = 100 Total Time Period = 20 years…
Q: A bond matures in 12 years, and pays an 8 percent annual coupon. The bond has a face value of…
A: Bonds are debts instruments that are issued by entities to raise funds and meet their capital…
Q: A firm has a bond issue with face value of $1,000, a 7% coupon rate, and nine years to maturity. The…
A: The price of the bond (PV) is $1,067.89. The face value of the bond (FV) is $1,000. The maturity…
Q: A 6-year bond with 1000 Rupees par value pays 80 Rupees interest annually and sells for 950 Rupees.…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: A firm’s bonds have a maturity of 8 years with a $1,000 face value,have an 11% semiannual coupon,…
A: Computation:
Q: A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period…
A: Bond value is the present worth of a cash flow at a certain rate of interest and time period it will…
Q: Assume that a company issued a bond with $1000 face value, 10% coupon rate, 20 years maturity. If…
A: Face value =$1000 Coupon rate =10% Coupon payment =$100 Time =20 years YTM =8% So, present value of…
Q: . A corporate bond has a face value of P1,000 and pays a P50 coupon every six months. The bond…
A: You have asked a question with multiple parts. As a result, we will solve first 3 parts for you as…
Q: Showbiz, Inc., has issued eight-year bonds with a coupon of 6.06 percent and semiannual coupon…
A: Market price of the bond is the present value of the future cash flows from the bond at market’s…
Q: Reach for the Sky, Inc., has a bond outstanding with $1,000 par value, a coupon rate of 5.96 percent…
A: To provide required return to investors, issue price should be equal to the present value of coupon…
Q: A General Motors bond carries a coupon rate of 8 percent, has 9 years until maturity, and sells at a…
A: 1. Bond holder will receive each year a coupon amount. That is coupon rate. Answer: 8%.
Q: The KLM bond has a 8% coupon rate (with interest paid semi-annually), a maturity value of $1,000,…
A: Bonds are debts instruments that are issued by entities to raise funds and meet their capital…
Q: Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a…
A: Face value of bond = $1000 Years to maturity = 10 Years Number of coupon payments = 10 Coupon rate…
Q: A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period…
A: A bond is an instrument that represents the loan that is made by the investor to the company and…
Q: A bond matures in 12 years and pays a 12.13 percent annual coupon. The bond has a face value of…
A: The market value of a bond is calculated as the discounted value of cash flows associated with the…
Q: Showbiz, Inc., has issued eight-year bonds with a coupon of 6.76 percent and semiannual coupon…
A: Bond price is calculated by present value of future cash flows. C is semi-annual coupon payment r…
Q: You are considering a bond with a coupon rate of 10% per annum. Coupons are paid semiannually. The…
A: Computation:
Q: Suppose a company issues a bond with a par value of €1,000, 5 years to maturity, and a coupon rate…
A: Par Value = €1,000 Years to Maturity = 5 years Coupon Rate = 8.5% Yield to maturity(YTM) = 7.5%…
Q: What is the current market price of these bonds?
A: Information provided: Term to maturity: 10years Future value: $1000 Coupon payments: $80 Yield to…
Q: A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 8% semi-annual coupon,…
A: Given the following information: Face value of bond: $1,000 Current price of bond: $1,127.23 Annual…
Q: A $1,000 face value bond has a 3% annual coupon rate and 12 years to maturity. If the yield to…
A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…
Q: You are purchasing a 20-year bond that matures in 6 years. The bond has a par value of $5,000,…
A: Yield to Maturity shows the total returns earned from the security if kept till maturity. To…
Q: A newly issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years,…
A: Hi there, thanks for posting the questions. But as per our Q&A guidelines, we must answer the…
Q: Showbiz, Inc., has issued eight-year bonds with a coupon of 5.78 percent and semiannual coupon…
A: This question has two parts: In part a we need to compute the market price of bond In part b we need…
Q: A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period…
A: A tradable assets instrument that is issued by the companies acts as corporate debts are known as…
Q: What is the yield to maturity on a bond that has a price of $1,700 and a coupon rate of 12% annually…
A: Information provided: Price = $1700 Future Value = $1000 Coupon rate = 12% Coupon payment = 120…
Q: Company B has a bond outstanding that pays a 8% coupon. The interest is paid semi-annually, and the…
A: Current yield can be calculated by dividing the coupon amount with current selling price of bond.…
Q: A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period…
A: There is an inverse relationship between the bond price and the yield to maturity, hence when the…
Q: An investor has two bonds in his portfolio. Each bond matures in 4 years,has a face value of $1,000,…
A: Bond refers to the financial debt instruments that are generally issued by banks for certain time…
Q: A firm has issued bonds with a remaining maturity of 1 year, face value of $100 and an annual coupon…
A: Bond default refers to the situation when issuer of a bond is unable to repay the bond amount which…
Q: A bond has an annual 8 percent coupon rate, a maturity of 10 years, a face value of $1,000, and…
A: The formula to calculate price of bond is given below,
Q: What is the Yield to Maturity of this bond? (HINT: USE EXCEL)
A: Yield to maturity is a long-term bond yield but is expressed as an annual rate. It is the internal…
Q: A bond that matures in 8 years has a par value of $1,000 and an annual coupon payment of $70, its…
A: Bonds are instrument issued by company acknowledging the debt raised by company . It is a liability…
Q: A bond matures in 15 years and pays an 8 percent annual coupon. The bond has a face value of $1,000…
A: Current yield = coupon price /current market price Yield on bond is rate we earn if we held the bond…
Q: Verbrugge Company has a level-coupon bond outstanding that pays coupon interest of $120 per year and…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: A $1000 bond with a coupon rate of 6.5% paid semiannually has eight years to maturity and a yield to…
A: Bond Current Price = C*(((1-(1+r)-n)/r)) + (Mv * (1+r)-n) Where C = Coupon amount Mv = Maturity…
Q: Consider a 8-year corporate bond issued by Vandalay Industries. The bond has a face value of $1,000,…
A: Bond price refers to the right price of a bond which is also called as the intrinsic value of the…
Q: You purchase a bond with an invoice price of $920. The bond has a coupon rate of 8.6%, semiannual…
A: Bond is a long-term financial instrument which is used by entities to raise debt funds from…
Q: Carrie’s Clothes, Inc. has a five-year bond outstanding that pays $60 annually. The face value of…
A: a) Bond's Coupon Rate = Annual Coupon / Face Value
Q: A 10-year corporate bond has a coupon rate of 6% with semi-annual payments. If interest rates rise…
A: time period = 10 * 2 = 20 annual coupon rate = 6% semi annual coupon rate = 3.00% interest rate = 7%…
Q: Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a…
A: Calculation of price of the bond:Answer:The price of the bond is $1,068.02 immediately after it…
Q: A bond that matures in eight years, has a coupon rate of 20% and has a maturity value of US$ 200.…
A: We require to calculate the present value of bond in this question. We can calculate the present…
Q: Lincoln Park Co. has a bond outstanding with a coupon rate of 5.34 percent and semiannual payments.…
A: A bond is a debt instrument that pays interest payments periodically as per the predetermined coupon…
Q: BES Company bonds, with current yield 14 per cent, will mature after 10 years with par value of…
A: Bonds are issued by corporates, government to raise finance. The borrower pays the bondholder…
- A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%.
a) What is the interest payment you should receive each year?
b) What is the selling price of the bond?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%. a) What is the interest payment you should receive each year? b) What is the selling price of the bond? Please use formula not exceA firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%. What is the interest payment you should receive each year?What will happen to the bond price, if the yield to maturity falls to 7%?What is the selling price of the bond?
- A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9%. a) What is the interest payment you should receive each year? b) What is the selling price of the bond? Please use formula not excelConsider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the rate of return of the bond? What is the yield to maturity of the bond?A 6-year bond with 1000 Rupees par value pays 80 Rupees interest annually and sells for 950 Rupees. What is the coupon rate, current yield and yield to maturity? A firm sells bonds with a par value of 1000 Rupees, carry a 8% coupon rate, with a maturity period of 9 years. The bond sells at a yield to maturity of 9% a) What is the interest payment you should receive each year? b) What is the selling price of the bond? Pakistan bank issues a 10-year treasury bond at 12% coupon with the par value of 1000 Rupees. If the market yield increases shortly afterwards, what happens to the following parameters: a) coupon rate b) price c) current yield d) yield to maturity.
- What is the yield to maturity on a bond that has a price of $1,700 and a coupon rate of 12% annually for 6 years at the end of which it repays the principal of $1000? Is the bond selling at premium, at par, or at discount? How can you tell? (Using financial calculator)Suppose you purchase a 30-year Treasury bond with a 6% annual coupon, initially trading at par. In 10 years’ time, the bond’s yield to maturity has risen to 7% (EAR).a. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond?b. If instead you hold the bond to maturity, what internal rate of return will you earn on your investment in the bond?c. Is comparing the IRRs a useful way to evaluate the decision to sell the bond?A bond has the following features: Coupon rate of interest: 5 percent Principal: $1,000 Term to maturity: 10 years a. What will the holder receive when the bond matures? b. If the current rate of interest on comparable debt is 8 percent, whatshould be the price of this bond? Would you expect the firm to callthis bond? Why? c. If the bond has a sinking fund that requires the firm to set aside annuallywith a trustee sufficient funds to retire the entire issue at maturity,how much must the firm remit each year for ten years if the funds earn8 percent annually and there is $100 million outstanding?
- Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for fouryears, and sell it immediately after receiving the fourth coupon. If the bond’s yield to maturitywas 5% when you purchased and sold the bond,a. What cash flows will you pay and receive from your investment in the bond per $100 face value?b. What is the internal rate of return of your investment?Consider a bond with a principal of $1,000 that pays a coupon of $100 per year. If the bond matures in one year and the current interest rate is i = 3%, what is the price (present value) of the bond? Round to the nearest cent. Answer:Suppose you purchase a 10-year bond with 6.19% annual coupons. You hold the bond for 4 years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.34% when you purchased and sold the bond, a. what cash flows will you pay and receive from your investment in the bond per $100 face value? b. what is the annual rate of return of your investment? a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline: (Round to the best choice below.) A. Years 2 3 Cash Flows $106.46 $6.19 $6.19 $6.19 $110.46 B. Years 0 2 3 4 Cash Flows - $106.46 $6.19 $6.19 $6.19 $110.46 C. Years 0 1 2 3 4 Cash Flows $104.27 $6.19 $6.19 $6.19 $110.46 D. Years 0 2 3 4 + $6.19 $6.19 $6.19 $104.27 Cash Flows - $110.46 b. What is the annual rate of return of your investment? The annual rate of return of your investment is %. (Round to two decimal places.)