1) Price the bonds from the following with ANNUAL coupon payments. A) Par value-
ID: 2708773 • Letter: 1
Question
1) Price the bonds from the following with ANNUAL coupon payments.
A) Par value-$1,000
Coupon rate-11%
Years to maturity-20
Yield to maturity-10%
Price - ?
B) Par value-$5,000
Coupon rate-7%
Years to maturity-5
Yield to maturity-6%
Price - ?
C)Par value-$5,000
Coupon rate-9%
Years to maturity-5
Yield to maturity-8%
Price - ?
D)Par value-$5,000
Coupon rate-10%
Years to maturity-20
Yield to maturity-9%
Price - ?
2) Price the bonds from the following with MONTHLY coupon payments.
A)Par value-$1,000
Coupon rate-11%
Years to maturity-30
Yield to maturity-12%
Price - ?
B)Par value-$5,000
Coupon rate-10%
Years to maturity-10
Yield to maturity-11%
Price - ?
C)Par value-$5,000
Coupon rate-6%
Years to maturity-30
Yield to maturity-5%
Price - ?
D)Par value-$5,000
Coupon rate-8%
Years to maturity-25
Yield to maturity-10%
Price - ?
3) Wesley Company will issue a zero-coupon bond this coming month. The projected bond yield is 3%. If the par value is $1,000, what is the bond's price using a semmiannual convention if
A.the maturity is 15 years?
B.the maturity is 35 years?
c.the maturity is 50 years?
d.the maturity is 90 years?
Explanation / Answer
1) Price the bonds from the following with ANNUAL coupon payments.
A) Par value-$1,000
Coupon rate-11%
Years to maturity-20
Yield to maturity-10%
Price = pv(10%,20,110,1000) = $ 1085.14
B) Par value-$5,000
Coupon rate-7%
Years to maturity-5
Yield to maturity-6%
Price = pv(6%,5,350,5000) = $ 5210.62
C)Par value-$5,000
Coupon rate-9%
Years to maturity-5
Yield to maturity-8%
Price = pv(8%,5,450,5000) = $ 5199.64
D)Par value-$5,000
Coupon rate-10%
Years to maturity-20
Yield to maturity-9%
Price = pv(9%,20,500,5000) = $ 5456.43
2) Price the bonds from the following with MONTHLY coupon payments.
A)Par value-$1,000
Coupon rate-11%
Years to maturity-30
Yield to maturity-12%
Price = pv(1%,360,9.16666667,1000) = $ 918.98
B)Par value-$5,000
Coupon rate-10%
Years to maturity-10
Yield to maturity-11%
Price = pv(0.91666666%,120,41.6666667,5000) = $ 4697.52
C)Par value-$5,000
Coupon rate-6%
Years to maturity-30
Yield to maturity-5%
Price = pv(0.41666666%,360,25,5000)=$ 5776.17
D)Par value-$5,000
Coupon rate-8%
Years to maturity-25
Yield to maturity-10%
Price = pv(0.8333333%,300,33.333333,5000)=$ 4082.94
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