Bond Price
Consider a bond which pays 7% semi-annually and has 8 years to maturity. The market requires an interest rate of 8% on bonds of this risk. What is this bond's price?
Homework Answers
| Bond Valuation Semi Annual Coupon |
| B= PV anninuity + PV Principal repay |
| B= (C*F/m) x [(1/(r/m)) - (1/(r/m*(1+(r/m))^(n*m))] + [F/(1+(r/m))^(n*m)] |
m Is payments per year = semi annual = 2
F is assumed $1000
r = 8%
c = 7%
n = 8yrs
BV = $941.74
Question 18 1 pts Consider a $1,000 par value bond which pays an annual coupon rate...
Question 18 1 pts Consider a $1,000 par value bond which pays an annual coupon rate of 7% and has 8 years to maturity. Interest is paid semi-annually. If the required rate of return is 8% (annually), what is this bond's price? $942.50 $911.52 $941.74 $1,064.81 None of the above. Question 19
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please show how to compute with a financial calculator. thank you! Bond Valuation Exercises: OM Question...
please show how to compute with a financial calculator. thank
you!
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19. A bond has 8 years to maturity, a 7 percent coupon, a $1,000 face value, and pays interest semi-annually. What is the bond's current price if the yield to maturity is...
please show how to compute with a financial calculator. thank
you!
Bond Valuation Exercises: OM Question 1. GTF Corporation has 5 percent coupon bonds on the market with a par of $1,000 and 10 years left to maturity. The bonds make annual interest payments. If the market interest rate on these bonds is 7 percent, what is the current bond price? Question 2. MTV Corporation has 7 percent coupon bonds on the market with a par of $1,000 and 8...
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