32. How much is the par value for a 5-year maturity bond that has a price of $1,

Question

32. How much is the par value for a 5-year maturity bond that has a price of $1,000

now and an annual coupon rate of 9% if the interest rate is 9%?

$700

$1,050

$1,000

$1,100

None of the above

33. What is the annual coupon payment for a bond (par value of $1,000) with 7 years

until maturity, a price of $1,000, and a discount rate of 6%?

$80

$70

$60

$50

None of the above

34. What happens to the price of a three-year bond with an 8% coupon when interest rates change from 6% to 8%?

A price increase of $53.47

A price decrease of $51.54

A price decrease of $53.47

No change in price

None of the above

35. What is the rate of return for an investor who pays $1,000 for a three-year bond

with a 7% coupon rate and sells the bond one year later for $1,000?

5%

6%

7%

8%

none of the above

Need help to solve questions with the correct formula. Questons from Financial Mangement Class. Thank You

Explanation / Answer

32)

1 Par value (FV) $                                          1,000 2 Coupon rate 9.00% 3 Number of compounding periods per year 1 4 = 1*2/3 Interest per period (PMT) $                                          90.00 5 Number of years to maturity 5 6 = 3*5 Number of compounding periods till maturity (NPER) 5 7 Market rate of return/Required rate of return 9.00% 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 $                                    1,000.00

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.