Value of bond (V) =
For , given data
V = Option C
year | Cash flow | Pv( Cash fow) |
0.5 | 5 | $4.72 |
1 | 5 | $4.46 |
1.5 | 5 | $4.22 |
2 | 5 | $3.99 |
2.5 | 5 | $3.77 |
3 | 5 | $3.56 |
3.5 | 5 | $3.36 |
4 | 5 | $3.18 |
4 | 110 | $69.91 |
Value | $101.67 |
6) What would be the current market value of a risk free bond with a face...
6) What would be the current market value of a risk free bond with a face value of £100 which pays a coupon of 10% and which matures in 4 years' time with a redemption value of £110, if providers of debt finance require a rate of return of 12%? a) £87.32 b) £98.43 c) £101.66 d) £107.64 e) £109.53
A zero coupon bond has a face value of $1,000 and matures in 6 years. Investors require a(n) 7.2 % annual return on these bonds. What should be the selling price of the bond? If the nominal rate of interest is 12.21 % and the real rate of interest is 8.76 % what is the expected rate of inflation? A Ford Motor Co. coupon bond has a coupon rate of 6.75%, and pays annual coupons. The next coupon is due...
Assume that the market risk-free interest rate is 12.00%. Assume that a zero-coupon risk free bond, with maturity 2 years and 100 face value, is trading at 75. Which of the following is true? (a) By lending today for two years at the market rate, and short-selling the bond, you have an arbitrage. (b) By borrowing today for two years at the market rate, and buying the bond, you have an arbitrage. (c) By buying the bond today and investing...
Flobama Electric (FE) has an outstanding bond with a $1,000 face value and a 6% coupon rate of interest (paid seminanually). The bond, issue 12 years ago, matures in 18 years. If investors require a return equal to 5.6% to invest in similar bonds, what is the market value of FE's bond? a. $1,044.64 b. $709.83 c. $1,045.00 d. $1,034.61 e. $956.34
3. Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $30,000 that matures in one year. The current market value of the firm’s assets is $36,400. The standard deviation of the return on the firm’s assets is 53 percent per year, and the annual risk-free rate is 5 percent per year, compounded continuously. Based on the Black–Scholes model, what is the market value of the firm’s equity and debt? What is the firm’s continuously compounded...
A bond with a face value of $ 1,000.00, an 18% coupon that pays interest annually, matures in 10 years. If your required rate of return is 12% How much would you be willing to pay for the bonus today?
Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows:Maturity (years)12345Yield to Maturity4.75%5.07%5.35%5.73%6.02%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 5-year, zero-coupon, risk-free bond?c. What is the risk-free interest rate for a 4-year maturity?Note: Assume annual compounding.
1) You need to determine the market value of a $1,000 face value bond maturing in 5 years. The market yield (interest rate) for this type of bond is 3.1%. What is its market value? (Round to the nearest penny). 2) A year ago, you purchased a $1,000 face value bond for $1024. A year later you sold the bond for $1,007 after receiving a coupon payment of $55. What was your rate of capital gain? (Answer in tenth of...
1) You need to determine the market value of a $1,000 face value bond maturing in 5 years. The market yield (interest rate) for this type of bond is 3.1%. What is its market value? (Round to the nearest penny). 2) A year ago, you purchased a $1,000 face value bond for $1024. A year later you sold the bond for $1,007 after receiving a coupon payment of $55. What was your rate of capital gain? (Answer in tenth of...
Question 1: A $1,010 face value bond is selling in the market place for $934. It matures in 3 years. If keep to maturity, what is the bond's yield to maturity? Question 2: A banker must earn at least a 2.7% return after expected inflation on short term loans. The inflation rate for the past 6 months has averaged 3.5%. The expected inflation rate for the next twelve months is 7.3%. Nominal interest rates for short term loans were 7.1%...