ZuoTi.Pro
Question
Compute the prices and current yields of the following bonds


STİONS: 15 points) prices and current yields of the following bonds: Bond 3 Today 0% Bond 1 Bond 2 Issuer Settlement Coupon rate Frequency coupon oday Today 6% 4% Semi- annuallyZero-coupon Annually 4 years $1,000 7% payment Term to Maturity 15 years6 years $1,000 $1,000 Face value 6% 8% Yield to Maturity Bond Price Bond Current Yield www.euruni.edu
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Bond-1 70% 4 $60.00 $1,000.00 Bond-2 3.0% 30 $20.00 $1,000.00 Bond-3 8.0% [Bond-2 6%/2 396; Annual rate is converted into semiannual rate Yield to Maturity, RATE # of Years to maturity, NPER Annual coupon payment, PMT Maturity value at the end, FV Annual coupon type, TYPE a) Value of the bond 6 [Bond-2 15 years x 2 30; There are 2 semiannuals in a year] $0.00 [Bond-1-$1,000 x 696-$60.00; Bond-2-$1,000 x 4%/2-$20.00] $1,000.00 [Face value of the bond] 0 =0 if coupons paid at the end of each period: 1 if coupons paid at the beginning of each period $966.13 $804.00$630.17 [Ref: NOTE] 0.00% [Bond-1-60.00/966.13-6.21%; Bond-2-20.00/804.00-2.49%x2-4.98%) b) Bonds Current Yield [Coupon payment/ Bonds current price; but for Bond-2, the result shall be multiplied by 2 to convert it into annual Current Yield] 6.21% 4.98%NOTE For Bond-1: Value of the bond is calculated using EXCEL FUNCTION PV(rate,nper,pmt,fv,type) where rate-7.0%; nper-4; pmt-60.00; fv=-1000; type-0; Here, value for pmt & fv are negative as they denote cash inflows; type 0 because cash flows occur at the end of each year only For Bond-2: Value of the bond is calculated using EXCEL FUNCTION PV(rate,nper,pmt,fv,type) where rate-3.0%; nper-30, pmts-20.00; fv=-1000, type-0; Here, value for pmt & fv are negative as they denote cash inflows; type 0 because cash flows occur at the end of each year only For Bond. 3: Value of the bond is calculated using EXCEL FUNCTION PV(rate,nper,pmt,fv type it denotes cash inflow; type 0 because interest compounds at the end of each year only. where rate=8.0%; nper-6; pmt= 0; fv=-1000, type:0; Here, value for fv is negative as Bond-2 :6%/2 -15*2 C5 496/2 $1,000.00 0 Bond-3 Bond-1 7.0% 8.096 [Bond-2 = 6%/2 396; Annual rate is converted into semiannual rate) 2 Yield to Maturity, RATE 3 | # of Years to maturity, NPER 6 (Bond-2-15 years x2-30;There are 2 semiannuals in a year $0.00 [Bond-1 = $1,000 x 696 = $60.00; Bond-2 = $1,000 x 4%/2 = $20.00] Annual coupon payment, PMT 5 Maturity value at the end, FV 6 Annual coupon type, TYPE 7 a) Value of the bond -B5*696 $1,000.00 1,000.00 [Face value of the bond] 0 O if coupons paid at the end of each period; 1 if coupons paid at the beginning of each period. B2,B3,-B4,-B5,B6)PV(C2,C3.-C4,-C5,C6)PV(D2,D3,-D4.-D5,D6) [Ref: NOTE 9 b) Bonds Current Yield -B4/B7 D4/D7 [Bond-1-60.00/966.13-6.21%; Bond-2 20.00/804.00 2.49%x2-4.9896]

0 0
Add a comment
Know the answer?
Add Answer to:
Compute the prices and current yields of the following bonds STİONS: 15 points) prices and current...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Compute the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault Odav Settlement...

    Compute the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault Odav Settlement Coupon rate Frequency coupon Today Today Today 2.75% 2.25% 0% Annual Semi-annual Ze payment Term to Maturity Face value Yield to Maturity Price Current Yield 2 years 20 years 5 years $1,000 3.4% 100 100 5.0% 4.2%

  • Business School Problem 1: (15 points) Compute the prices and yields of the following bonds Issuer...

    Business School Problem 1: (15 points) Compute the prices and yields of the following bonds Issuer Volkswagen JP Morgan Renaut TodayT Settlement Coupon rate Frequency coupon Today Today 2.75% 2.25% 0% payment Term to Maturity Face value Yield to Maturity Price Current Yield AnnualSemi-annual Zero-coupon 2 years 20 years 5 years $1,000 3.4% E100 100 5.0% 4.2% Problem 2: (20 points) Suppose you hold a 6.5 percent coupon bond with a par value of $100 that matures in 14 years...

  • Compute the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault Settiement Today...

    Compute the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault Settiement Today Today Today Coupon rate 2.75% 2.25% 0% Frequency coupon payment Term to Maturity Face value Yield to Maturity Price Current Yield Annual Semi-annual Zero-coupon 2 years20 years 5 years $1,000 3.4% 100 4.2% 100 5.0%

  • SHOW THE COMPLETE CALCULATIONS e the prices and yields of the following bonds: Issuer Volkswagen JP...

    SHOW THE COMPLETE CALCULATIONS e the prices and yields of the following bonds: Issuer Volkswagen JP Morgan Renault JP Morgarn Settlement Coupon rate Frequency coupon Today Today Today 2.75% 2.25% 0% payment Term to Maturity Face value Yield to Maturity Price Current Yield 2 years 100 5.0% 20 years $1,000 3.4% 5 years 100 4.2%

  • Bond Valuation Exercise (a)        Compute the price / yield of the following bonds. (b)        Indicate which...

    Bond Valuation Exercise (a)        Compute the price / yield of the following bonds. (b)        Indicate which bond experiences the biggest price change (in percentage terms) when yields increase by 1%. Issuer Bosch Bank of America Nissan Settlement Today Today Today Coupon 3.50% 2.75% 0% Frequency coupon payment 1 2 Zero-coupon Maturity 2 years from now 25 years from now 6 years from now Face value €100 $100 €100 Yield 2.2% 3.7%     6.3% Price …. …. …. New Yield …....

  • Question #5: Bond Pricing [16 Points Calculate the prices of the following bonds (16 Points; 8...

    Question #5: Bond Pricing [16 Points Calculate the prices of the following bonds (16 Points; 8 Points each] (a) A 14 year $1000 face value coupon bond that pays an coupon rate of 4.6%. The YTM = 3.2%. Assume that the coupon payments are paid semi-annually, (b) A 14 year $1000 face value coupon bond that pays an coupon rate of 4.6%. The YTM = 3.2% Assume that the coupon payments are paid annually. Question #6: Bond Pricing and Accrued...

  • Today is April 15, 2016 (a leap year). We have the prices and yields for the...

    Today is April 15, 2016 (a leap year). We have the prices and yields for the following three bonds. Assume that all the bonds have face values of $1,000, and pay semi-annual coupons. Bond Coupon Maturity date Bid $ Yield % 1 5.750 Jun/01/2029 146.76 1.74 2 5.750 Jun/01/2033 154.59 1.97 3 3.500 Dec/01/2045 131.48 2.07 Fill in the blanks in the following table. Clearly show all reasoning and calculations in your answers. Bond Clean price $ Last coupon date...

  • 1. Allied Corporation has just issued ten thousand $1,000 bonds, maturing in 2048, to establish a...

    1. Allied Corporation has just issued ten thousand $1,000 bonds, maturing in 2048, to establish a research and development fund for a new product. The goal is to develop and launch this new product by late 2020. The offering interest rate was 4.50% for the bonds. Identity the following values for each bond: Face amount __________ Yield _____ Coupon payment _____ Amount paid _____ semiannually Periods to maturity _____ Present value __________ Yield to maturity _____ 2. Using the Allied...

  • 1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of...

    1. The following table summarizes prices of various default-free, zero-coupon bonds (expressed as a percentage of face value): Maturity (years) Price (per $100 face value) $95.51 9105 $86.38 $81.65 $76.51 (a) Compute the yield to maturity for each bond. (b) Plot the zero-coupon yield curve (for the first five years). (c) Is the yield curve upward sloping, downward sloping, or flat? 2. Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading with a yield...

  • Note: If not otherwise stated, assume that: • Yield-to-maturity (YTM) is an APR, semi-annually compounded •...

    Note: If not otherwise stated, assume that: • Yield-to-maturity (YTM) is an APR, semi-annually compounded • Bonds have a face value of $1,000 • Coupon bonds make semi-annual coupon payments; however, coupon rates (rc) are annual rates, i.e., bonds make a semi-annual coupon payment of rc/2 Four years ago, Candy Land Corp. issued a bond with a 14% coupon rate, semi-annual coupon payments, $1,000 face value, and 14-years until maturity. a) You bought this bond three years ago (right after...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT