2. Profitability index= Present value of future cash flows-initial investment
From step 1, we have found the bond price to be 971.27
TZS
therefore PI=971.27-850=1.14
profitability index which is <= 1 is considered acceptable
Purchase Government bond which currently trades at TZS 850 with 10% annual coupon rate. The bond...
Question 29 (1 point) A bond currently trades at $995 on the secondary market. The bond has 7 years until maturity and pays an annual coupon at 6% of face value. The face value of the bond is $1,000. What is the coupon (or current) yield for this bond? (Enter your answers as a decimal rounded to 4 decimal places, not a percentage. For example, enter 0.0843 instead of 8.43%) Your Answer: Answer DView hint for Question 29 Question 30...
What is the value of a bond that has an annual coupon of 12%, a maturity of 5 years and the market yield is currently at 8%? What is the value of a bond that has an annual coupon of 7%, a maturity of 10 years and the market yield is currently at 8%? What is the value of a bond that has an annual coupon of 8%, a maturity of 15 years and the market yield is currently at...
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1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20 years remaining until maturity at a price equal to par value. The investor’s investment horizon is eight years. The approximate modified duration of the bond is 11.470 years. What is the duration gap at the time of purchase? (Hint: use approximate Macaulay duration to calculate the duration gap) 2. An investor plans to retire in 10 years. As part of the retirement portfolio, the...
A) You are considering the purchase of a $1,000 par value bond with a coupon rate of 5% (with interest paid semiannually) that matures in 12 years. If the bond is priced to yield 9%, what is the bond's current price? The bond's current price is $__ B) Compute the current yield of a(n) 8.5%, 25-year bond that is currently priced in the market at $1,200. Use annual compounding to find the promised yield on this bond. Repeat the promised...
Assume that you are considering the purchase of a 10-year, noncallable bond with an annual coupon rate of 9.0%. The bond has a face value of $1,000, and it makes semiannual coupon payments. If you require an 8.5% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
You are considering the purchase of a 40-year original maturity, semi-annual coupon bond that was issued 12 years ago. The bond presently has an annual yield to maturity of 12 percent. If the bond’s current market value is $1,186.99, what is the bond’s annual coupon rate?
You own a bond that has a 6% annual coupon rate and matures 5
years from now. You purchased this 10-year bond at par value when
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