Question

Question 7 Homework. Unanswered Suppose you structured a bond deal for Kanye West that paid him $20 million upfront, with future royalties and streaming revenues from his past albums going towards payments to bondholders. Each bond had a face value of $1,000 and a coupon rate of 7.7% with semi-annual coupons. If the bonds have 9 years remaining until maturity and the current yield to maturity is 9.7%, how much is the bond worth? Round to the nearest cent. Numeric Answer: Unanswered 2 attempts left Submit Question 8 Homework. Unanswered A Tesla coupon bond with a face value of $1,000 has a coupon rate of 6% with annual coupons and it will mature in 5 years. If it is currently trading at $813.5, what is its yield-to-maturity? Round to the tenth of a percent(e.g., 4.32% = 4.3) (Hint: Use Excel's "rate" function as explained in the text. Make sure you set the cell to show decimal places.] Numeric Answer:

Answer 1

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Price of a bond is the present value of its cash flows. The cash flows are the coupon payments and the face value receivable on maturity

Price of bond is calculated using PV function in Excel :

rate = 9.7%/2 (Semiannual YTM of bonds = annual YTM / 2)

nper = 9 * 2 (18 years remaining until maturity with 2 semiannual coupon payments each year)

pmt = 1000 * 7.7% / 2 (semiannual coupon payment = face value * coupon rate / 2)

fv = 1000 (face value receivable on maturity)

PV is calculated to be $881.72

A1 - X fi =PV(9.7%/2,9*2,1000*7.7%/2,1000) B C D E F G ($881.72)!