Q-1: Calculate the market value of Bonds B, C, and D in the Table below: Bond Issue date Initial term (years) Coupon rate (%) Bond price A Today 6. $1000 5 years ago 10 More than $1000 10 years ago 15 $1000 D 15 years ago 20 5 Less than $1000
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- 6. Yield to Maturity Each of the bonds shown below pays interest annually. Bond Par Value Coupon Years to Maturity Current Value A 12% 15 B 10% 10 C $1000 13% 10 D $1000 8% 4 a) Calculate the yield to maturity (YTM) for each bond. $1000 $500 $850 $560 $1200 $900 b) What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond? Explain.If the YTM on the following bonds are identical except, what is the price of bond B? Bond A Bond B Face value $1,000 $1,000 Semiannual coupon $45 $35 Years to maturity 20 20 Price $1,098.96 ?K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {
- Bond valuationSemiannual interest Calculate the value of each of the bonds shown in the following table all of which pay interest semlannua below in order to copy its contents into a spreadsheet Coupon interest rate Years to maturity Required stated annual retum Bond Par Value $1.000 500 500 A B 12 14 The value of bond A is S710 98| (Round to the nearest cent.)Data table ↑ The current zero-coupon yield curve for risk-free bonds is as follows: What is the price per $100face value of a two-year, zero-coupon, risk-free bond? The price per $100 face value of the two-year, zero-coupon, risk-free bond is $ (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) YTM 1 4.98% 2 5.48% 3 5.78% Print Done 4 5 5.96% 6.09% (Round to the nearest cent.) - XThe following information about bonds A, B, C, and D are given. Assume that bond prices admit noarbitrage opportunities. What is the convexity of Bond D?Cash Flow at the end ofBond Price Year 1 Year 2 Year 3A 91 100 0 0B 86 0 100 0C 78 0 0 100D ? 5 5 105
- Acme Chemical, Inc. is a major manufacturer of chemical products for the agricultural ndustry, including pesticides, herbicides and other compounds. Due to a number of law suits elated to toxic wastes, Acme Chemical has recently experienced a market re-evaluation of its common stock. The firm also has a bond issue outstanding with 10 years to maturity and an annual coupon rate of 5 percent, with interest paid semi annually. The required nominal market annual interest rate on this bond has now risen to 10 percent due to the high risk level associated vith this firm. The bonds have a par or face value of $1,000. 1. Label each of the variables that you would use to determine the value of this bond in the market today: N (time periods until maturity) PMT (periodic interest payment) I per (periodic market interest rate) EV (future value to be received when the bond matures) = 2. Based on the variables that you have identified in Question #1, what is the market value. today (the present…Question 2 a) What are the main characteristics of a bond? Provide examples of different types of bonds in terms of coupons and maturity. b) Explain the difference between "coupon rate" and "yield to maturity", Show, using examples, how changes in the coupon rate and yield to maturity affects the bond price. c) You are asked to put a value on a bond which promises eight annual coupon payments of £50 and will repay its face value of £1000 at the end of eight years. You observe that other similar bonds have yields to maturity of 9 per cent. i) i) How much is this bond worth? (" You are offered the bond for a price of £755.5. What yield to maturity does this represent? d. You believe that next year XYZ plc will pay a dividend of £2 on its common stock Thereafter you expect dividends to grow at a rate of 4% a year in perpetuity. If you require a return of 12% on your investment. i. How much should you be prepared to pay for the stock? ii. Assuming that the expected stock price at the end…FINA2... moodle1.du.edu.om T riay question Suppose you plan to invest part of your savings in bonds issued by Salalah Food Industries. Therefore, you must calculate the current yield on these bonds before making the decision to invest in them. The information below has been provided to assist you in calculating the current yield on these bonds. market price 1892 OMR, annual coupon rate 0.17 face value 2,500 OMR maturity 14 years. Select one: a. 0.1700 b. 0.1287 C. All the given answers in this question are wrong d. 0.2246 II
- Rank the following bonds in order of descending duration: BOND COUPON RATE (%) TIME TO MATURITY (YRS) YTM (%) A 15 20 10 B 15 15 10 C 0 20 10 D 8 20 10 E 15 17 102. Determine the purchase price and the amount of premium/discount of the given bonds. Face Value Coupon Rate Yield Rate Redemption Date Purchase Date Purchase Price ? a. $1000.00 5.25% 5.25% January 01, 2024 January 01, 2019 b. $5000.00 4.75% 6.75% October 20, 2028 October 20, 2018 ? c. $10,000.00 7.85% 4.15% August 16, 2034 August 16, 2014 ? Amount of Premium/Discount ? ? ?A B C D E The following tables contain coupon, pricing, and other information for a series of bonds with different maturities. Bond Characteristics Settlement date Bond A 3/15/2023 Maturity date 11/14/2027 Bond B Bond C Bond D 3/15/2023 3/15/2023 3/15/2023 11/14/2027 11/14/2047 11/14/2047 Annual coupon rate 4.00% 4.00% 7.50% 7.50% Yield to maturity 5.00% 5.00% 5.00% 5.00% Redemption value (% of face value) 100 100 100 100 Coupon payments per year 1 2 1 2 Required: Note: Use cells A2 to E10 from the given information to complete this question. Using the information above, please calculate the flat (or quoted) price as well as days since last coupon, days in a coupon period, accrued interest, and finally the invoice price. All prices are expressed as percent of par. Flat price (% of par) Days since last coupon Days in coupon period Accrued interest (% of par) Invoice price (% of par) Bond A Bond B Bond C Bond D F