ZuoTi.Pro
Question

Your broker offers to sell you a bond for $950. The bond has a coupon rate of 6% and a maturity of 5 years. Given that the in

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Calculatng Bond Price,

Using TVM Calculation,

PV = [FV = 1,000, PMT = 60, N = 5, I = 0.04]

PV = $1,089.04

Bond Price = $1,089.04

So,

the bond price today > the offer price.

0 0
Add a comment
Know the answer?
Add Answer to:
Your broker offers to sell you a bond for $950. The bond has a coupon rate...
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

  • Your broker offers to sell for $1,060 a AAA-rated bond with a coupon rate of 5...

    Your broker offers to sell for $1,060 a AAA-rated bond with a coupon rate of 5 percent and a maturity of seven years. Given that the interest rate on comparable debt is 4 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ ______ Is your broker fairly pricing the bond? _______(Yes or No) , so the bond _____(should or...

  • Your broker offers to sell for $1,250 a AAA-rated bond with a coupon rate of 8...

    Your broker offers to sell for $1,250 a AAA-rated bond with a coupon rate of 8 percent and a maturity of ten years. Given that the interest rate on comparable debt is 5 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Is your broker fairly pricing the bond? , so the bond be purchased.

  • Your broker offers you the opportunity to purchase a bond with a coupon rate of 7%...

    Your broker offers you the opportunity to purchase a bond with a coupon rate of 7% per year and a face value of $1,000. If the yield to maturity on similar bonds is 8%, this bond should: Sell at par value. Sell at a premium to face value. Unable to determine if sold at premium or discount to face value. Sell at a discount to face value. O Sell at the same price as the similar bond regardless of the...

  • 4. [5 Points] Your broker offers you the opportunity to purchase a bond with coupon payments...

    4. [5 Points] Your broker offers you the opportunity to purchase a bond with coupon payments of $80 per year and a face value of $1,000. If the yield to maturity on similar bonds is 7%, will the bond price be greater or less than the face value and why? What is the bond called? If the yield to maturity on similar bonds increases to 9%, what will happen to the bond price?

  • 1. A bond with two years remaining until maturity offers a 3% coupon rate with interest...

    1. A bond with two years remaining until maturity offers a 3% coupon rate with interest paid annually. At a market discount rate of 4%, find the price of this bond per 1000 of par value. 2. A bond offers an annual coupon rate of 5%, with interest paid semiannually. The bond matures in seven years. At a market discount rate of 3%, find the price of this bond per 1000 of par value. 3. A zero-coupon bond matures in...

  • Your broker calls with an offer on a corporate bond that he feels is perfect for...

    Your broker calls with an offer on a corporate bond that he feels is perfect for your portfolio. The bond has 7 years remaining to maturity, semi-annual payments, and a coupon rate of 5.5%. Given today’s yield curve, you estimate that the yield on a comparable Treasury security is 2.2%. What are the present values of the annuity stream, principal repayment, and the maximum value you’d be willing to pay for the bond? A) $368.60, $857.99 and $1,226.59 B) $368.60,...

  • a) A level-coupon bond carries a coupon rate of 6 percent, payable semiannually, has 10 years...

    a) A level-coupon bond carries a coupon rate of 6 percent, payable semiannually, has 10 years until maturity, and the yield to maturity is 8 percent. (i) What interest payments do bondholders receive each year? (ii) At what price does the bond sell? (iii) What will happen to the bond price if the yield to maturity falls to 5 percent? b) The British government’s outstanding perpetual bonds have annual coupon payments of $25, payable annually. The market interest rate today...

  • 3. Consider the situation with the following initial values. The risk-free rate of return is 3 pe...

    3. Consider the situation with the following initial values. The risk-free rate of return is 3 percent, and the expected return on the market is 8.7 percent. Stock A has a beta coefficient of 1.4, a dividend growth rate of 5 percent, and a current dividend of $2.60 per share. (a) (5 points) What is the value of the stock? (b) (5 points) If the current market price of the stock is $27 per share, what should you do? (c)...

  • when the coupon the All else constant, a bond will sell at yield to maturity a...

    when the coupon the All else constant, a bond will sell at yield to maturity a premium; less than a premium; equal to a discount; less than D. a discount; higher than par; less than с. 4 The Walthers Company has a semi-annual coupon bond outstanding tanding. An increase in the market rate of interest will have which of the following effects which of the following effects on the bond? increase the coupon rate decrease the coupon rate increase the...

  • You own a bond that has a 6% annual coupon rate and matures 5 years from...

    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 it was originally issued. Which one of the following statements applies to this bond if the relevant market interest rate is now 5.8% (yield to maturity)? You purchase a bond with a coupon rate of 6.25% and a par value of $1,000. There are 53 days to the next semiannual coupon payment date and...

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