Question

Need ASAP

Bl. DODO Find the price of a semiannual coupon bond given that the coupon rate = 14%, the face value = $1000, the required return = 9%, and there are 10 years remaining until maturity a. $1317.33 b. $1322.16 c. $1325.2 d. S1330.43 B2. Find the price of a semiannual coupon bond given that the coupon rate = 7%, the face value = $1000, the required return = 7%, and there are 13 years remaining until maturity. a. $997.4 b. $1000 c. $1002.59 d. $1005.6 B3. Find the price of a semiannual coupon bond given that the coupon rate = 12%, the face value = $1000, the required return = 12%, and there are 18 years remaining until maturity. a. $1000 b. $1002.44 c. $1006.8 d. $1012.26

Answer 1

In order to calculate coupon rate we would first calculate coupon amount by using the present value of bond formula.
Price of bond	Interest payment*(1-((1+r)^-n)/r) + Face value*(1/(1+r)^n)
where r represents yield to maturity and n represents number of years.
B1
Semiannual coupon amount	70	1000*(14%/2)
Semiannual YTM	4.50%	9%/12
No of payments	20	10*2
Price of bond	70*(1-((1.045^-20)/0.045)+1000*(1/(1.045^20))
Price of bond	70*13.00794 + 1000*0.414643
Price of bond	$1,325.2
B2.
Semiannual coupon amount	35	1000*(7%/2)
Semiannual YTM	3.50%	7%/12
No of payments	26	13*2
Price of bond	35*(1-((1.035^-26)/0.035)+1000*(1/(1.035^26))
Price of bond	35*16.89035 + 1000*0.408838
Price of bond	$1,000.00
B3.
Semiannual coupon amount	60	1000*(12%/2)
Semiannual YTM	6.00%	12%/12
No of payments	36	18*2
Price of bond	60*(1-((1.06^-36)/0.06)+1000*(1/(1.06^36))
Price of bond	60*14.62099+1000*0.122741
Price of bond	$1,000.00
T1.
Future value	Present value*((1+r)^n)
Future value	1100*(1.04^4)
Future value	1100*1.169859
Future value	$1,286.84
T2.
Calculation of present value of cash flow stream is shown below
Year	Cash flow	Discount factor @ 5% (1/((1+r)^n)	Present value
1	$100	0.95238	$95.2
2	$200	0.90703	$181.4
3	$200	0.86384	$172.8
4	$200	0.82270	$164.5
5	$200	0.78353	$156.7
6	$200	0.74622	$149.2
Present value			$919.9
Thus, present value of cash flow stream is $919.9
T3.
Future value	Present value*((1+r)^n)
Future value	1100*(1.06^5)
Future value	1100*1.338226
Future value	$1,472.05
T4.
Future value	Present value*((1+r)^n)
Future value	800*(1.16^9)
Future value	800*3.802961
Future value	$3,042.37