4. Find the purchase price and market price of the following bonds on November 3

Question

4. Find the purchase price and market price of the following bonds on November 30, 2017. Please show your work. (a) 9-year 6% bond with a face value of $20,000, yielding 5.5%, issued on August 22, 2013. (b) 4-year 4.5% bond with a face value of $15,000, yielding 5%, issued on April 29, 2016. (c) 11-year 3% bond with a face value of $50,000 and a redemption value of $52,000, yielding 3.5%, issued on November 21, 2008. (d) 7-year 9% bond with monthly coupons, a face value of $30,000, yielding 4%, issued on June 15, 2017

Explanation / Answer

1) Face Value $20,000.00 Coupon Rate 6.00% Coupon Payment $1,200.00 Rate 5.50% Period 9 Settlement Date Aug 22, 2013 Maturity Date Nov 30,2017 Purchase Price = PV = Price Function in Excel $15,933.01 2) Face Value $15,000.00 Coupon Rate 4.50% Coupon Payment $675.00 Rate 5.00% Period 4 Settlement Date Apr 29, 2016 Maturity Date Nov 30,2017 Purchase Price = PV = Price Function in Excel $13,889.65 3) Face Value $52,000.00 Coupon Rate 3.00% Coupon Payment $1,560.00 Rate 3.50% Period 11 Settlement Date Nov 1, 2008 Maturity Date Nov 30,2017 Market Price = PV = Price function in excel $38,071.42 4) Face Value $30,000.00 Coupon Rate = 9%/12 0.75% Coupon Payment $225.00 Rate = 4%/12 0.33% Period 5.5 Market Price = PV(.33%,5.5,-225,-30000) $30,680.11

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