( Bond Valuation) You own a 20-year, $1,000 par value bond paying 6 percent interest annually....
( Bond Valuation) You own a 20-year, $1,000 par value bond paying 6 percent interest annually. The market price of the bond is $750, and your required rate of return is 10 percent.
1) What is the value of the bond to you, given your 10 percent required rate of return?
Homework Answers
Value of bond is $ 659.46
| Price of bond is the present value of future cash flows. | |||||||
| Present value of future cash flows | = | =-pv(rate,nper,pmt,fv) | Where, | ||||
| = | $ 659.46 | rate | = | 10% | |||
| nper | = | 20 | |||||
| pmt | = | $ 60.00 | |||||
| fv | = | $ 1,000.00 | |||||
Add Answer to:
( Bond Valuation) You own a 20-year, $1,000 par value bond
paying 6 percent interest annually....
(Bond valuation) You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The...
(Bond valuation) You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $900, and your required rate of return is 11 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return c. Should you sell the bond or continue to own it? a. What is the expected rate of return of the 10-year, $1,000 par value...
(Bond valuation) You own a 15-year $1.000 par value bond paying 7.5 percent interest annually. The...
(Bond valuation) You own a 15-year $1.000 par value bond paying 7.5 percent interest annually. The market price of the bord is $825, and your required rate of return is 11 percent a. Compute the bond's expected rate of return b. Determine the value of the bond to you, given your required rate of return c. Should you sell the bond or continue to own it? a. What is the expected rate of return of the 15-year, $1,000 par value...
(Bond valuation) National Steel's 20-year, $1,000 par value bonds pay 12 percent interest annually. The market...
(Bond valuation) National Steel's 20-year, $1,000 par value bonds pay 12 percent interest annually. The market price of the bonds is $1 200, and your required rate of return is11 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond? (What function is used to calculate in excel??)))
(Bond valuation) Fingen's 15-year, $1,000 par value bonds pay 9 percent interest annually. The market price...
(Bond valuation) Fingen's 15-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the bonds is $930 and the market's required yield to maturity on a comparable-risk bond is 8 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you, given your required rate of return. c. Should you purchase the bond?
1. Barasa Trading company has a 20-year, $1,000 par value bonds that pay 6 percent interest...
1. Barasa Trading company has a 20-year, $1,000 par value bonds that pay 6 percent interest annually. The market price of the bonds is $1,200, and your required rate of return is 8 percent. Required: a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate of return. c. Should you purchase the bond? d. Without doing any computations, if interest was paid semi-annually, would you buy the bond or...
(Bond valuation) You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 20 years....
(Bond valuation) You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 20 years. Your required rate of return is 12 percent aleos Edg a. Calculate the value of the bond. b. How does the value change if your required rate of return (1) increases to 15 percent or (2) decreases to 7 percent? c. Explain the implications of your answers in part (b) as they relate to interest rate risk, premium...
2. You own a 20-year, $1000 face value bond paying 8% coupon annually. What should be...
2. You own a 20-year, $1000 face value bond paying 8% coupon annually. What should be the market price of the bond so that its Yield to Maturity is exactly 10%? You also own a 30-year, $1000 face value bond paying 9% coupon annually. If your required rate of return is 9%, what should be the value of the bond?
The 15-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually
(Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation relationships) The 15-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually. The market price of the bond is $1,145, and the market's required yield to maturity on a comparable-risk bond is 8 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond. c. Should you purchase the bond? a. What is your yield to...
Bond Valuation A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for...
Bond Valuation A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been issued.) Basic Input Data: Years to maturity: Periods per year. Periods to maturity: Coupon rate: Par value: Periodic payment: Current price 8% $1,000 $1,100 b. What would be the price of the bond if market interest rates change to: 12% 6% 10% Nominal market rate, r: Value of bond:
The 17-year, $1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market...
The 17-year, $1,000 par value bonds of Waco Industries pay 8 percent interest annually. The market price of the bond is $925, and the market's required yield to maturity on a comparable-risk bond is 10% percent. a. What is your yield to maturity on the Waco bonds given the current market price of the bonds? ____% b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond. c. Should you purchase...
(Bond valuation) You own a 10-year, $1,000 par value bond paying 8 percent interest annually. The market price of the bond is $900, and your required rate of return is 11 percent. a. Compute the bond's expected rate of return. b. Determine the value of the bond to you, given your required rate of return c. Should you sell the bond or continue to own it? a. What is the expected rate of return of the 10-year, $1,000 par value...
(Bond valuation) You own a 15-year $1.000 par value bond paying 7.5 percent interest annually. The market price of the bord is $825, and your required rate of return is 11 percent a. Compute the bond's expected rate of return b. Determine the value of the bond to you, given your required rate of return c. Should you sell the bond or continue to own it? a. What is the expected rate of return of the 15-year, $1,000 par value...
1. Barasa Trading company has a 20-year, $1,000 par value bonds that pay 6 percent interest annually. The market price of the bonds is $1,200, and your required rate of return is 8 percent. Required: a. Compute the bond's expected rate of return. b. Determine the value of the bond to you given your required rate of return. c. Should you purchase the bond? d. Without doing any computations, if interest was paid semi-annually, would you buy the bond or...
(Bond valuation) You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 20 years. Your required rate of return is 12 percent aleos Edg a. Calculate the value of the bond. b. How does the value change if your required rate of return (1) increases to 15 percent or (2) decreases to 7 percent? c. Explain the implications of your answers in part (b) as they relate to interest rate risk, premium...
Bond Valuation A 20-year, 8% semiannual coupon bond with a par value of $1,000 sells for $1,100. (Assume that the bond has just been issued.) Basic Input Data: Years to maturity: Periods per year. Periods to maturity: Coupon rate: Par value: Periodic payment: Current price 8% $1,000 $1,100 b. What would be the price of the bond if market interest rates change to: 12% 6% 10% Nominal market rate, r: Value of bond:
Most questions answered within 3 hours.
-
A women tries to swim perpendicular across the river to the
opposite bank at 2.0m/s with...
asked 10 minutes ago -
The amount of time it takes for a student to complete a
statistics quiz is uniformly...
asked 1 hour ago -
True or False: If some system undergoes a reversible,
isothermal
process, then its entropy must remain...
asked 46 minutes ago -
You are analyzing the after-tax cost of debt for a firm. You
know that the firm’s...
asked 44 minutes ago -
You
are dining with a friend and use the friend's spoon to taste her
food, if...
asked 1 hour ago -
explain why The elasticity of demand for labor is higher the
higher the elasticity of supply...
asked 1 hour ago -
Hi just need to know if these statements are true or false and
why!!!
1. Magnetic...
asked 1 hour ago -
A radar transmits a pulse every 0.5
ms. It transmits an up-chirp of the duration of...
asked 1 hour ago -
Poehling Medical Center has a single operating room that is used
by local physicians to perform...
asked 1 hour ago -
Can somebody solve this? Insert 22, 78, 10, 56, 12, 7, 34, 56
into the Min-...
asked 1 hour ago -
Need a recent news article that was published less than 3 months
ago that talks about...
asked 1 hour ago -
Problem 2:
Composite and multi-valued attributes can be nested to any
number of levels. Suppose we...
asked 1 hour ago