FINC 300 (01): Fall 2017 Homework: Chapter 9 Homework Save Score: 0 of 2 pts | 9
ID: 2785723 • Letter: F
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FINC 300 (01): Fall 2017 Homework: Chapter 9 Homework Save Score: 0 of 2 pts | 9 of 12 (4 complete) | HW Score: 24.53%, P9-10 (similar to) Question Help | * Related to Checkpoint 9.3) (Bond valuation) Doisneau 17-year bonds have an annual coupon interest of 15 percent, make interest payments on a semiannual basis, and have a $1,000 par value. If the bonds are trading with a market's required yield to maturity of 18 percent, are these premium or discount bonds? Explain your answer. What is the price of the te bonds? a. If the bonds are trading with a yield to maturity of 18%, then (Select the best choice below.) A the bonds should be selling at a discount because the bond's coupon rate is less than the yield to maturity of similar bonds. OB the bonds should be selling at a premium because the bond's coupon rate is greater han the yield to maturity of similar bonds. c there is not enough information to judge the value of the bonds. = 0 D. the bonds should be selling at par because the bond's coupon rate is equal to the yield to maturity of similar bonds. b. The price of the bonds is $ (Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer All parts showing Clear All Check AnswerExplanation / Answer
Correct option is (A)
1 Par value (FV) $ 1,000 2 Coupon rate 15.00% 3 Number of compounding periods per year 2 4 = 1*2/3 Interest per period (PMT) $ 75.00 5 Number of years to maturity 17 6 = 3*5 Number of compounding periods till maturity (NPER) 34 7 Market rate of return/Required rate of return 18.00% 8 = 7/3 Market rate of return/Required rate of return per period (RATE) 9.00% Bond price PV(RATE,NPER,PMT,FV)*-1 Bond price $ 842.23Related Questions
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