I need a little help with these questions please. Rogn is planning to invest in

Question

I need a little help with these questions please.

Rogn is planning to invest in five year, 15% annual coupon bonds with the a face value of $ 1,000 each. Complete the following table by calculating the value of each bond and the current yields at the various discount rates. There is a district relationship between coupon rate, discount rate, and a bonds price to its per value. Based on your preceding calculations, complete the following statements: A bond is referred to as a pure bond when coupon rate yield required by the market, price per value. A bond is referred to as a pure discount bond when coupon rate yield required by the market, price per value. A bond is referred to as a pure bond when coupon rate yield required by the market, price per value. If the markets are at equilibrium and the market price of the bonds is equal to the intrinsic value of the bonds, when bond list is selling at a discount? Bond B Bond C Bond A

Explanation / Answer

P = C * ( 1 - (1+i)^-N)/i + M * (1 + i)^-N P = present value of bond C= coupon rate * Face value = 0.15 * 1000 = 150 i = annual discount rate. N = no. of years = 5 M = face value = 1000 Current yield = C/P (a) when i = 6% = 0.06 P = 150 * ( 1 - (1+0.06)^-5)/0.06 + 1000 *(1 + 0.06)^-5 = $ 1379.11 Current yield = 150/1379.11 = 0.1088 (b) when i = 15% = 0.15 P = 150 * ( 1 - (1 + 0.15)^-5)/0.15 + 1000*(1+0.15)^-5 = $ 1000 Current yield = 150/1000 = 0.15 (c) when i = 17% = 0.17 P = 150*( 1 - (1+0.17)^-5)/0.17 + 1000*(1+0.17)^-5 = $ 936.01 Current yield = 150/936.01 = 0.1603 Post a clear pic. I can't make out the words of the statements to answer them correctly. A bond is called premium bond if it's current price is greater than Face value. Here Bond A is selling at premium value. A bond is called discount bond if it's current price is less than Face value. Here Bond C is selling at discount value. A bond is called Par bond if it's current price is equal to Face value. Here Bond B is selling at Par value.

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