ZuoTi.Pro
Question

A bond that compounds annually has a Face Value of $1,000 and maturity of 15 years....

A bond that compounds annually has a Face Value of $1,000 and maturity of 15 years. Assume that its coupon rate is 8% and yield to maturity (YTM) is 6.12%. What is this bond’s market price?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Interest = $1,000 * 0.08 = $80

Current bond price = $80(PVIFA 6.12%,15) + $1,000(PVIF 6.12%,15)

Current bond price = ($80 * 9.63654918553) + ($1,000 * 0.41024318977)

Current bond price = $1,181.17

0 0
Add a comment
Know the answer?
Add Answer to:
A bond that compounds annually has a Face Value of $1,000 and maturity of 15 years....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • A bond has a face value of $1,000, a coupon of 5% paid annually, a maturity...

    A bond has a face value of $1,000, a coupon of 5% paid annually, a maturity of 34 years, and a yield to maturity of 8%. What rate of return will be earned by an investor who purchases the bond for $652.39 and holds it for 1 year if the bond’s yield to maturity at the end of the year is 9%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount...

  • 25-year bond has a $1,000 face value, a 10% yield to maturity, and an 8% annual...

    25-year bond has a $1,000 face value, a 10% yield to maturity, and an 8% annual coupon rate, paid semi-annually. What is the market value of the bond? Suppose a bond with a 10% coupon rate and semiannual coupons, has a face value of $1000, 20 years to maturity and is selling for $1197.93. What’s the YTM?

  • A bond has a face value of $1,000, a coupon rate of 8%, and a maturity...

    A bond has a face value of $1,000, a coupon rate of 8%, and a maturity of 10 years. It pays interest annually, and the yield to maturity is 12%. In WORDS (1-2 complete sentences each) answer the following questions. What does it mean that the bond above has a face value of $1,000? What does it mean that the bond has a coupon rate of 8%? What does it mean that the bond has a maturity of 10 years?...

  • Yield to maturity and future price A bond has a $1,000 par value, 15 years to...

    Yield to maturity and future price A bond has a $1,000 par value, 15 years to maturity, and a 8% annual coupon and sells for $1,080. What is its yield to maturity (YTM)? Round your answer to two decimal places.    % Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today? Round your answer to the nearest cent. $  

  • 19. A bond has 8 years to maturity, a 7 percent coupon, a $1,000 face value,...

    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 6.97 percent? A. $799.32 B. $848 16 C. $917.92 D. $1,005.46 E. None of the above.l 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...

  • A bond has a par value of $1,000, a time to maturity of 15 years, and...

    A bond has a par value of $1,000, a time to maturity of 15 years, and a coupon rate of 8.90% with interest paid annually. If the current market price is $890, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

  • A 15-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a...

    A 15-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 6%. a. What is the bond’s yield to maturity if the bond is selling for $1,110? Enter annual yield to maturity as your answer. (Do not round intermediate calculations. Round your answer to 3 decimal places.) Annual yield to maturity % b. What is the bond’s yield to maturity if the bond is selling for $1,000? Enter annual yield to maturity...

  • A bond has a par value of $1,000, a time to maturity of 20 years, and...

    A bond has a par value of $1,000, a time to maturity of 20 years, and a coupon rate of 7.40% with interest paid annually. If the current market price is $740, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What will be the price of the bond next year if its YTM remains unchanged?...

  • Question 15 1 pts A $1,000 face value bond currently has a yield to maturity of...

    Question 15 1 pts A $1,000 face value bond currently has a yield to maturity of 6.69%. The bond matures in three years and pays interest annually. The coupon rate of the bond is 7.00%. What is the current price of this bond? $823.43 $1,008.18 $1,000.00 $991.86

  • Question 15 1 pts A $1,000 face value bond currently has a yield to maturity of...

    Question 15 1 pts A $1,000 face value bond currently has a yield to maturity of 6.69%. The bond matures in three years and pays interest annually. The coupon rate of the bond is 7.00%. What is the current price of this bond? $1,008.18 $991.86 $823.43 $1,000.00

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT