Question

Bond valuation—Quarterly interest Calculate the value of a $1,000-par-value bond paying quarterly interest at an annual coupon interest rate of 12% and having 14 years until maturity if the required return on similar-risk bonds is currently a 13% annual rate paid quarterly.

Answer 1

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DATE: 1 Given Par Value = $1000 Time to maturity = 14 years or [14x4quarters] = 56 periods Coupon interest rate = 121 or [ 12 = 4quarters] = 3 to per period Coupon Amount = 31 of 1000 = $30 per period Required rate = 13% Bor (13=4] = 3.25% per period Jalue = Coupon Amount X Present Value Annenty factor (3.25%, 56 periods) (+) Face value x Present Value factor (3.257156 periods) 25-637388954 000 X 0.16678485867 > (from Arunuty Table) = 769.12 + 166.78 $93509