Question

A zero coupon bond has a face value of $1,000 and matures in 6 years. Investors require​ a(n) 7.2 % annual return on these bonds. What should be the selling price of the​ bond?

If the nominal rate of interest is 12.21 % and the real rate of interest is 8.76 % what is the expected rate of​ inflation?

A Ford Motor Co. coupon bond has a coupon rate of 6.75​%, and pays annual coupons. The next coupon is due tomorrow and the bond matures 28 years from tomorrow. The yield on the bond issue is 6​%. At what price should this bond trade​ today, assuming a face value of $1,000​?

Answer 1

1)

$ 1,000 0% 1 $0 6 A Par value (FV) B Coupon rate C Number of compounding periods per year D = AxB/C Interest per period (PMT) E Number of years to maturity Number of compounding periods till F=CxE maturity (NPER) Market rate of return/Required rate of Greturn Market rate of return/Required rate of G/Creturn per period (RATE) Bond sale price 6 7.2% 7.2% PV(RATE,NPER,PMT,FV)*-1 Bond sale price $ 658.92 =PV(7.2%,6,0,1000)*-1

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