Page Enterprises has bonds on the market making annual payments, with nine years
ID: 2650613 • Letter: P
Question
Page Enterprises has bonds on the market making annual payments, with nine years to maturity, and selling for $966. At this price, the bonds yield 6.80 percent.
What must the coupon rate be on the bonds? (Round your answer to 2 decimal places. (e.g., 32.16))
Ninja Co. issued 10-year bonds a year ago at a coupon rate of 7.0 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.3 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))
Page Enterprises has bonds on the market making annual payments, with nine years to maturity, and selling for $966. At this price, the bonds yield 6.80 percent.
Explanation / Answer
Page Enterprises has bonds on the market making annual payments, with nine years to maturity, and selling for $966. At this price, the bonds yield 6.80 percent.
What must the coupon rate be on the bonds? (Round your answer to 2 decimal places. (e.g., 32.16))
Coupon Value = pv(rate, nper,pmt,fv)
Nper (indicates the period) = 9
PV (indicates the price) = 966
PMT (indicate the annual payment) = ?
FV (indicates the face value) = 1000
Rate (indicates YTM) = 6.80%
Coupon Value = pmt( 6.80%,9,-966,1000)
Coupon Value = $ 62.83
Coupon rate = 62.83/ 1000
Coupon rate = 6.28%
Answer
Coupon rate 6.28 %
Ninja Co. issued 10-year bonds a year ago at a coupon rate of 7.0 percent. The bonds make semiannual payments. If the YTM on these bonds is 5.3 percent, what is the current bond price? (Round your answer to 2 decimal places. (e.g., 32.16))
Current bond price = pv(rate, nper,pmt,fv)
Nper (indicates the semi annual period) = 9*2 = 18
PV (indicates the price) = ?
PMT (indicate the semi annual payment) = 1000*7%*1/2 = 35
FV (indicates the face value) = 1000
Rate (indicates semi annual YTM) = 5.30%*1/2 = 2.65%
Current bond price = pv( 2.65%,18,35,1000)
Current bond price = $ 1120.44
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