/connect.html omework 4 6 Help Save & Exlit Sub A General Power bond carries a c

Question

/connect.html omework 4 6 Help Save & Exlit Sub A General Power bond carries a coupon rate of 9196, has 9 years until maturity, and sells at a yield to maturity of 81%. (Assume annual interest payments) a. What interest payments do bondholders receive each year? b. At what price does the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. vnat will happen to the bond price if the yield to maturity fails to 71%? ( answer to 2 decimal places.) (Do not round intermediate calculations. Round your by

Explanation / Answer

Face Value (FV) $1,000.00 Coupon Rate 9.10% Coupon payment = $1000 x 9.1% $91.00 (a) Interest Payments Period 9 years YTM 8.10% Price = PV(8.10%,9,-91,-1000) $1,062.21 (b) Price Face Value (FV) $1,000.00 Coupon Rate 9.10% Coupon payment = $1000 x 9.1% $91.00 Period 9 YTM 7.10% Price = PV(7.10%,9,-91,-1000) $1,129.75 Price will increase by ($1129.75 -$1062.21) $67.54 (c)

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