Answered: Bond Z pays $98 annual interest and has…

Bond Z pays $98 annual interest and has a market value of $870. It has five years to maturity. Assume the par value of the bonds is $1,000. Approximate Yield to Maturity? Exact Yield to Materity?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

See similar textbooks

Related questions

Q: What is the yield to maturity on the following bonds; all have a maturity of 10 years, a face value…

A: Yield To Maturity is the Rate which is expected to earn from a bond after considering all interest…

Q: Fingen's 11-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the…

A: Time Duration = 11 years Par Value = $1,000 Coupon Rate = 11% Market price = $1,110 The required…

Q: What is the price of a 12 year bond paying semiannual interest at a rate of 9.5% with a yield to…

A: Par Value of Bond = $1,000Interest Rate = 9.5%Type of Interest = Semi-annual Calculation of…

Q: The market price is $800 a 17-year bond ($1,000 par value) that pays 9 percent annual interest, but…

A: In the given question we need to compute the bond's yield to maturity using following details :…

Q: ACT has an outstanding bond with a face value ( principal) of 1,000which would mature in 10 years.…

A: Current market value = present value of all future cash flows Here FV = 1000; nper (or time…

Q: Assume a company-issued bond with 4,000 OMR face value in the muscat security market with 0.154…

A: Given: Face value = 4,000 Coupon rate = 15.4% YTM = 8% Years = 12

Q: Fingen’s 16-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the…

A: given information Fingen’s 16-year, $1,000 par value bonds annual coupon = 1000 x 9% = 90 market…

Q: A 15-year bond with 9% coupons paid semi-annually will be redeemed at P 6,300. The bond is bought to…

A: Given: Years = 15 Coupon = 9% Redeemable value = P6,300 Yield = 7.5% Purchase price = P6,750

Q: A bond matures in 12 yesrs has a $1000 par value. The annual interest rate is 13 percent. The…

A: Time period of bond = 12 years Par value = $1000 Coupon Rate = 13% Yield to maturity = 14%

Q: A $1,000 face value bond is currently quoted at 100.8. The bond pays semiannual payments of $22.50…

A: In the given question we need to calculate the coupon rate on bond using following details: Face…

Q: A one-year premium bond with a face value of $10,000 has been purchased for $11,150. What is the…

A: The following information has been provided in the question: Face value of bond= $10,000 Price of…

Q: What is the present value of a 200,000 (face value) bond issued at coupon rate 10%, due in 3 years,…

A: Following details are given in the question : Coupon rate = 10% Time period = 3 years Coupon…

Q: Channel Marker Ships (CMS) has a 14-year callable bond with a $1,000 face value and a call value, or…

A: given, n = 14 par=$1000 price= $886 call price= $1070 called year= 6 m=2

Q: llais Company’s bond has an $85 annual interest payment that will mature in 10 years at a value of…

A: The yield of the bond is the required rate of return on the investment made by the bondholders. The…

Q: A 9-year bond pays interest of $26.20 semiannually, has a face value of $1000, and is selling for…

A: B0 = Interest * PVCF @ YTM for 18 periods + Maturity Value * PVF @ YTM for 18th period

Q: A 2-year Treasury bond pays coupon interest semiannually. Suppose the annual coupon rate is 8%, the…

A: A risk-free bond that is issued by the government, and also has a more than 20 years maturity period…

Q: Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of…

A: The bond's price is present value of future coupons and par value receivable at maturity. bond pays…

Q: a $1,000 face value bond matures in 30 years and pays semi-annual coupon payments based on an annual…

A: A bond is a debt instrument issued by companies or the government to raise funds from the public and…

Q: A firm issues a 10-year bond with a face value of $1,000 and annual coupon payments of $100.…

A: In this question we need to compute the yield to maturity of bond which will make its present value…

Q: Miles Corporation's bonds have a 15-year maturity, an 8% semi-annual coupon, and a par value of…

A: The amount that the bondholder expects in order to invest in bonds at the time of maturity is…

Q: A bond that matures in 7 years sells for $1,020. The bond has a face value of$1,000 and a yield to…

A: Given information: Face value of bond is $1,000 Price of bond is $1,020 Yield to maturity is…

Q: Fingen's 16-year, $1,000 par value bonds pay 11 percent interest annually. The market price of the…

A: Yield to maturity refers to the internal rate of return which is earned by the investor who makes…

Q: maturity

A: Formula to calculate YTM is: C+F - P n F + P 2 Where C is the coupon payment, F is the face…

Q: A 15-year bond has a $1,000 par value bond, a 4% coupon and a yield to maturity of 3.3%. Interest is…

A: Information Provided: Bond term = 15 years Face value = $1000 Coupon rate = 4% Yield to maturity =…

Q: A 7 year bond with maturity value of $5504.1 and a yield rate of 5% was sold 15 months before…

A: Maturity value of the bond = $5,504.10 Yield rate = 5.00% Number of years = 7 years Purchase value…

Q: Suppose that a company issues $10000 face value discount bond maturing in one year.What is the price…

A: The bond is a fixed-income debt security. The current price of the bond is the discounted value at a…

Q: Crane Corp is issuing a 10-year bond with a coupon rate of 11 percent. The interest rate for similar…

A: Computation:

Q: Blue Co. holds the following bonds which all have a yield to maturity of 15% and matures in 10…

A: Coupon rate of XYZ = YTM of XYZ = 15% Face value = P 5000 Total return required on XYZ sale = 18%…

Q: Smithson Co.'s Class A bonds have 10 years to go until maturity. They have a $1,000 face value and…

A: In the given problem we require to compute the bond's yield to maturity.

Q: A bond that matures in 6 years has a par value of $1,000, an annualcoupon payment of $80, and a…

A: A financial instrument that has a fixed income and also helps a company to raise funds for business…

Q: Assume that a bond makes 30 equal annual payments of \$1,000$1,000 starting one year from today.…

A: Using excel PV function

Q: Arnot International’s bonds have a current market price of $1,200. The bondshave an 11% annual…

A: Yield to maturity (YTM), indicates the amount that an investor can earn at the bonds' maturity.

Q: he market price is $725 for a 9-year bond ($1,000 par value) that pays 12 percent annual…

A: A bond is a debt instrument that is issued by the organization to raise the funds from the investor…

Q: Smithson Co.'s Class A bonds have 10 years to go until maturity. They have a $1,000 face value and…

A: Bonds are issued by the company to meet the financial requirements of the company without losing its…

Q: Graystone bonds have a maturity value of $1,000. The bonds carry a coupon rate of 12%. Interest is…

A: Answer

Q: An 8-year bond for Rusk Corporation has a market price of $700 and a par value of $1,000. If the…

A: In this question we need to calculate the yield to maturity of bond. We can calculate yield to…

Q: What is the yield to maturity for the following bond: current price is $908, coupon rate is 11…

A: Here, Present value (PV) = $908 Maturity value (FV) = $1,000 Coupon rate = 11% Time to maturity (n)…

Q: A $85,000, 8.50% bond redeemable at par, with annual coupon payments, is purchased 8 years before…

A: The bond's value or the price can be computed as the sum of the bond's coupons and principal after…

Q: 4-year bond, with a face value of $1000, and a coupon rate of 5% (coupon is paid semi-annually), has…

A: Using Excel Rate function

Q: are these premium for discount bonds? What is the price of the bonds?

A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: A $85,000, 8.50% bond redeemable at par, with annual coupon payments, is purchased 8 years before…

A: Bond value is the value of a bond measured on the basis of the present value of all the expected…

Q: Blue Co. holds the following bonds which all have a yield to maturity of 15% and matures in 10…

A: Bond XYZ Coupon = Annual Rate * Face Value = 15%*5000 = 750 YTM = Annual Rate = 15% N = 10

Q: A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8% and face…

A: Zero coupon bond is a debt instrument which does not involve any coupon payment and is issued below…

Q: A bond has the following terms: Principal amount $1,000 Semi-annual interest $45 Maturity 15…

A: BOND PRICE FORMULA: PRICE=P1+RN+INTEREST×1-11+RNR

Question

Bond Z pays $98 annual interest and has a market value of $870. It has five years to maturity.

Assume the par value of the bonds is $1,000.

Approximate Yield to Maturity?

Exact Yield to Materity?

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
A one-year premium bond with a face value of $10,000 has been purchased for $11,150. What is the yield to maturity? What is the yield on a discount basis?
What is the yield to maturity on a bond that has a price of $1,600 and pays $100 interest annually for 6 years at the end of which it repays the principal of $1000? Is the bond selling at premium, at par, or at discount? How can you tell?
Given: Bond Face or Par Value: $1,000 Current Market Price: $995.34 Time to Maturity: 11 years Coupon: $30 per year, paid semiannually Bond is callable in five years at $1,030 a. What is the bond's coupon rate? b. What is the bond's current yield? c. What is the bond's yield to maturity? (Use financial calculator to solve, list all keystrokes)
A bond: pay $75 each year in interest, and a $1,000 payment at maturity. The $1,000 is called? A) couponB) face valueC) discountD) yield
A 6-year bond pays interest of $80 annually and sells for $975. What is its coupon rate, current yield, and yield to maturity?
numerical answers should be calculated to at least two decimal places. Face value of bonds is taken as $100. assume coupon payments are paid once a year. Bond A: term to maturity=10 years, coupon rate = 9.75%, current price = $160.55. Find the current yield and yield to maturity of Bond A. Bond B: term to maturity-5 years, coupon rate = 11.25%, yield to maturity -2.35% p.a. Find the current price of Bond B. From your answer, what do say about this price when compared with the face value of the bond?
Yield Computation. What is the yield to maturity for a bond paying $45 semi-annually that has twelve years until maturity and sells for $975? Please use formula if possible.
A 14-year, $1,000 par value Fingen bond pays 6% interest annually (assume semi- annual payments). The price of the bond is $1,100 and the market's required yield to maturity on a comparable-risk bond is 5.50%. a. Compute the bonds yield to maturity. b. Determine the value of the bond to you, given your required rate of return (the YTM on a comparable-risk bond). c. Should you purchase the bond? a. b. Coupon rate Par (FV) Years (n) m PMT PV (price) YTM Coupon rate Par (FV) Years (n) m PMT PV (price) YTM 6.0% $1,000 14 2 $30 Calculation $1,100 6.0% $1,000 14 2 $30 Calculation Note: if you want PV to be a positive number, you must use a minus sign for both pmt and FV 5.50%
Assume that a bond makes 30 equal annual payments of \$1,000$1,000 starting one year from today. (This security is sometimes referred to as an amortizing bond.) If the discount rate is 3.5\%3.5% per annum, what is the current price of the bond?
A bond has the following terms: Principal amount $1,000 Semi-annual interest $45 Maturity 15 years a. What is the bond's price if comparable debt yields 11%? b. What would be the price if comparable debt yields 11% and the bond matures after ten years? c. What are the current yields and yields in a. and b.?