Consider a $1,000 par value bond with a 9% annual coupon. The bond pays interest annually....

Question

Question

Answer 1

Answer #1

Amount willing to be paid for the bond=PV(9%,5,-9%*1000,PV(10%,15,9%*1000,1000))
=950.56570

Answer 2

Similar Homework Help Questions

4. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in...

4. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. The value of the bond today will be rate is 8% a. $1,075.80 b.$924.16 if the coupon c. $922.78 d. $1,077.20 e. none of the above 5. A zero-coupon bond has a yield to maturity of 9% and a par value of$1,000. Ifthe bond matu in 8 years, the bond should sell for a...
A coupon bond that pays interest of $60 annually has a par value of $1,000, matures...

A coupon bond that pays interest of $60 annually has a par value of $1,000, matures in 5 years, and is selling today at $883.31. What is the yield to maturity for this bond? a. 6% b. 7% c. 8% d. 9%
A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures...

A coupon bond which pays interest of $60 annually, has a par value of $1,000, matures in 5 years, and is selling today at a 584.52 discount from par value. The approximate yield to maturity on this bond is A6% B. 7% C. 8% D. 9% For a discount bond, its coupon rate is_than its yield to maturity and its price is expected to ___over the years. A B. C. D. Greater; increase Greater; decrease Lower; increase Lower; decrease A...

16. A coupon bond which pays interest of $40 annually, has a par value of $1,000,...

16. A coupon bond which pays interest of $40 annually, has a par value of $1,000, matures in 5 years, and is selling today at a $159.71 discount from par value. The actual yield to maturity on this bond is (in APR). 1) 5% 2) 6% 3) 7% 4) 8%
A coupon bond that pays interest annually has a par value of $1,000, matures in six...

A coupon bond that pays interest annually has a par value of $1,000, matures in six years, and has a yield to maturity of 11%. The intrinsic value of the bond today will be ________ if the coupon rate is 7.5%. A) $886.28 B) $851.93 C) $1,123.01 D) $1,000.00 E) $712.99
A coupon bond that pays interest of $55 annually has a par value of $1,000, matures...

A coupon bond that pays interest of $55 annually has a par value of $1,000, matures in 5 years, and is selling today at a $74.00 discount from par value. The current yield on this bond is _________.

Bond X is noncallable and has 20 years to maturity, a 11% annual coupon, and a...

Bond X is noncallable and has 20 years to maturity, a 11% annual coupon, and a $1,000 par value. Your required return on Bond X is 11%; and if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5, years the yield to maturity on a 15-year bond with similar risk will be 12%. How much should you be willing to pay for Bond X today? (Hint: You will need...
The bond shown in the following table pays interest annually. Par value Coupon interest...

The bond shown in the following table pays interest annually. Par value Coupon interest rate Years to maturity Current value $100 12% 20 $130 Calculate the yield to maturity (YTM) for the bond. Show formula
A coupon bond that pays interest annually has a market value equal to its par value...

A coupon bond that pays interest annually has a market value equal to its par value of $1,000. It matures in five years, and has a coupon rate of 9%. The yield to maturity on this bond is what?

Coupon bond that pays interest of 8% annually has a par value of 1,000 matures in...

Coupon bond that pays interest of 8% annually has a par value of 1,000 matures in 20 years and is selling today at 1,200 ( or 120% ask price). Actual yield? Suppose that the bond is callable in 3 years at 100%. Therefore, the issuer has the right to buy the bond at par value after 2 years. In this case. what's the yield to call?