1. Value of Bond A : 87500* PVIFA(r,n) + 5000000*PVIF(r,n) = 170511 + 4584563 = 47,55,074.
2. Value of Bond B : Face value/ (1+r)n = 4000000/ (1+ 5.25%) 10 = 5,24,326.
Description You are an internal auditor in a fund management company. You have been asked to...
How to do these questions. Thanks Description You are an internal auditor in a fund management company. You have been asked to verify the valuation of three bonds picked from a fund's portfolio as of close of business on 31 December 2015 Bond A Face value Coupon Repayment Bullet at maturity Maturity Yield: $5,000,000 3.50% pa. payable semiannually 31 December 2020 The yield required by investors for a 5-year bond rated A+ by Standard & Poors and A1 by Moody's...
You are an internal auditor in a fund management company. You have been asked to verify the valuation of two bonds picked from a fund's portfolio as of close of business on 31 December 2018. Bond A Face value: $3,000,000 Coupon: Repayment: Bullet at maturityd Maturity: Yield: 2.50% pa. payable semiannually. 31 December 2023 The yield required by investors for a 5-year bond rated A+ by Standard & Poors and A1 by Moody's is 2.25% (semi-annual compounding) Bond B ce...
6. Bond Valuation A BBB-rated corporate bond has a yield to maturity of 9%. AU.S. Treasury security has a yield to maturity of 7.5% These yields are quoted as APRS with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 8.4% and have five years to maturity a. What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price (expressed as a percentage of the face value)...
A BBB-rated corporate bond has a yield to maturity of 11.8%. A U.S. Treasury security has a yield to maturity of 10.5%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 11.0% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond? c. What is the credit...
Grummon Corporation has issued zero-coupon corporate bonds with a five-year maturity (assume $100 face value bond). Investors believe there is a 15% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 40 cents per dollar they are owed. If investors require a 6% expected return on their investment in these bonds, what will be the price and yield to maturity on these bonds?Note: Assume annual compounding.
Grummon Corporation has issued zero-coupon corporate bonds with a five-year maturity (assume $ 100 face value bond). Investors believe there is a 20 % chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 50 cents per dollar they are owed. If investors require a 6 % expected return on their investment in these bonds, what will be the a. price of these bonds? b. yield to maturity on these bonds? Note: Assume...
Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 Yield to Maturity 4.13% 4.61% 4.86% 5.25% 5.62% a. What is the price per $100 face value of a 3-year, zero-coupon risk-free bond? b. What is the price per $100 face value of a 4-year, zero-coupon, risk-free bond? c. What is the risk-free interest rate for a 2-year maturity? Note: Assume annual compounding. a. What is the price per $100 face value...
1. Suppose today is Dec 31st, 2019 and the U.S. Treasury notes have been issued with a December 2024 maturity, $1000 face value, and a 2.2% coupon rate with semiannual coupons. The first coupon payment will be paid on Jun. 30th 2020. If the yield to maturity is 3% today, then what is price of the U.S. Treasury notes today? A. $1037.68 B. $970.06 C. $963.11 D. $837.93 2. Suppose a five-year, $1000 bond with semiannual coupons has a price...
Thank you! Problem 6-30 A BBB-rated corporate bond has a yield to maturity of 8.2%. A U.S. Treasury security has a yield to maturity of 6.5%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at a rate of 7% and have five years to maturity. Note: assume a $1,000 face value. Complete the stata below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you...
Sheridan Real Estate Company management is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is 14.6 percent? (Round answer to 2 decimal places, e.g. 15.25.) Price of the bond $ Linda Williams wants to invest in four-year bonds that are currently priced at $875.32. These bonds have a coupon rate of 6.4 percent and...