ABC, Inc. has issued a $1,000 par 6% annual coupon bond that is to mature in...
ABC, Inc. has issued a $1,000 par 6% annual coupon bond that is to mature in 20 years. If your required rate of return is 7.5%, what price would you be willing to pay for the bond?
Homework Answers
Information provided:
Par value=future value= $1,000
Time= 20 years
Coupon rate= 6%
Coupon payment= 0.06*1,000= $60
Required return= 7.5%
The value of the bond today is calculated by computing the present value.
Enter the below in a financial calculator to compute the present value:
FV= 1,000
N= 20
PMT= 60
I/Y= 7.5
Press the CPT key and PV to compute the present value.
The value obtained is 847.08.
Therefore, the value of the bond today is $847.08.
In case of any query, kindly comment on the solution.
Add Answer to:
ABC, Inc. has issued a $1,000 par 6% annual coupon bond that is
to mature in...
1. ABC, Inc. has issued a 21-year bond with a par value of $1,000, coupon rate...
1. ABC, Inc. has issued a 21-year bond with a par value of $1,000, coupon rate of 7.42%. The yield to maturity (YTM) is 3.03%. Assume semi-annual payments. What is today's price of this bond?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. 2.A 5% semiannual coupon bond maturing in 5 years with a par value of $100 is trading at $95. Calculate the yield to maturity. 3.Suppose you...
(Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value...
(Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 30 years. If you require a return of 14 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond? a. The price you would be willing to pay for the bond is $(Round to the nearest cent.)
(Bond valuation) Bellingham bonds have an annual coupon rate of 15 percent and a par value...
(Bond valuation) Bellingham bonds have an annual coupon rate of 15 percent and a par value of $1,000 and will mature in 5 years. If you require a return of 8 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond? The price you would be willing to pay for the bond is $ . (Round to the nearest cent.)
(Bond valuation) Bellingham bonds have an annual coupon rate of 13 percent and a par value...
(Bond valuation) Bellingham bonds have an annual coupon rate of 13 percent and a par value of $1,000 and will mature in 5 years. If you require a return of 12 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond? a. The price you would be willing to pay for the bond is (Round to the nearest cent.)
A bond issued by Liberty, Inc. has a coupon rate of 8% and a face value...
A bond issued by Liberty, Inc. has a coupon rate of 8% and a face value of $1,000. The bond will mature in 2 years. The bond is currently selling in the market at a price of $950. A potential investor calculates that in order to earn her required return of 9%, the present value of the bond is $982. What is the most that the investor should be willing to pay for the bond? $1,000 $982 $1,160 $950
Rackawieca Corp. has issued a 7% annual coupon bond with a par of $1,000 and with...
Rackawieca Corp. has issued a 7% annual coupon bond with a par of $1,000 and with 2 years to maturity. Find the value of this bond if the required rate of return is 7%. Say the price of this bond dropped by $50 later this afternoon. What is the YTM of this bond at the lower price? Calculate the duration and modified duration of this bond. Demonstrate that the modified duration is a reasonable measure of interest rate sensitivity of...
ABC Inc. recently issued $1,000 par bonds at a 2.1% coupon rate. If the bonds have...
ABC Inc. recently issued $1,000 par bonds at a 2.1% coupon rate. If the bonds have 20 years to maturity and a YTM of 16.94%, what is the current price of the bond? Assume semi-annual compounding.Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box.
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18...
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18 years to maturity and the current price is $885. If the call price is $1,080 and the bond can be called in 8 years, what is the yield to call? Assume semi-annual compounding. Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box. Question 19 1 pts The coupon rate on a bond...
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18...
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18 years to maturity and the current price is $885. If the call price is $1,080 and the bond can be called in 8 years, what is the yield to call? Assume semi-annual compounding. Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box. Question 19 1 pts The coupon rate on a bond...
(Bond valuation) Calculate the value of a bond that will mature in 17 years and has...
(Bond valuation) Calculate the value of a bond that will mature in 17 years and has a $1,000 face value. The annual coupon interest rate is 11 percent, and the investor's required rate of return is 14 percent The value of the bond is S828.27 (Round to the nearest cent. (Bond valuation) Calculate the value of a bond that will mature in 14 years and has a $1.000 face value. The annual coupon interest rate is 5 percent, and the...
(Bond valuation) Bellingham bonds have an annual coupon rate of 8 percent and a par value of $1,000 and will mature in 30 years. If you require a return of 14 percent, what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond? a. The price you would be willing to pay for the bond is $(Round to the nearest cent.)
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18 years to maturity and the current price is $885. If the call price is $1,080 and the bond can be called in 8 years, what is the yield to call? Assume semi-annual compounding. Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box. Question 19 1 pts The coupon rate on a bond...
ABC Inc. recently issued $1,000 par bonds at a 8.40% coupon rate. The bonds have 18 years to maturity and the current price is $885. If the call price is $1,080 and the bond can be called in 8 years, what is the yield to call? Assume semi-annual compounding. Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box. Question 19 1 pts The coupon rate on a bond...
(Bond valuation) Calculate the value of a bond that will mature in 17 years and has a $1,000 face value. The annual coupon interest rate is 11 percent, and the investor's required rate of return is 14 percent The value of the bond is S828.27 (Round to the nearest cent. (Bond valuation) Calculate the value of a bond that will mature in 14 years and has a $1.000 face value. The annual coupon interest rate is 5 percent, and the...
Most questions answered within 3 hours.
-
Write a chemical equation for these reactions. (Use
the lowest possible whole number coefficients.) Include
states-of-matter...
asked 1 hour ago -
For each of the Z-scores below, determine two probabilities
(show four three decimal places): (1) the...
asked 1 hour ago -
Oxidative phosphorylation is achieved through chemiosmotic
coupling, which turns chemical energy into osmotic potential energy
that...
asked 4 hours ago -
Hollywood Shoes would like to maintain their cash account at a
minimum level of $64,000, but...
asked 4 hours ago -
Proteins CtrA-P, DnaA, and GcrA behave similarly to what
molecule in the Eukaryotic Cell Cycle?
asked 4 hours ago -
TRUE OR FALSE
In case of a competitive tender procedure, in the request for
quotation, the...
asked 4 hours ago -
I am a little behind please provide some explanation, will
provide thumbs up.
This question considers...
asked 4 hours ago -
Let say the utility function as U(X,Y) = lnX + Y. Show that the
marginal rate...
asked 4 hours ago -
A current of I=8.0A is flowing in a typical extension cord of
length L=3.00m. The cord...
asked 4 hours ago -
1. When balancing the equation H2SO4 (aq) + NaOH (aq) →
Na2SO4(aq) + H2O(aq), would you...
asked 5 hours ago -
Provide a definition of “classification hierarchy” and
illustrate your definition with an example of how and...
asked 5 hours ago -
1. Describe the four main green solvents. Provide one example of
the use of each solvent....
asked 5 hours ago