A bond offers a $50 coupon, has a face value of $1,000, and 15 years until...

Question

Question

A bond offers a $50 coupon, has a face value of $1,000, and 15 years until maturity. If the interest rate is 4.5%, what is the value of the bond?

Answer 1

Answer #1

Value of bond=Annual coupon*Present value of annuity factor(4.5%,15)+$1000*Present value of discounting factor(4.5%,15)

=50*10.73954573+$1000*0.516720442
=$1053.70(Approx).

NOTE:

1.Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=50[1-(1.045)^-15]/0.045

=50*10.73954573

2.Present value of discounting factor=1000/1.045^15

=$1000*0.516720442

Answer 2

Similar Homework Help Questions

A bond with a face value of $1,000 has 10 years until maturity, carries a coupon...

A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.9%, and sells for $1,110. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.) a. If the bond has a yield to maturity of 9.1% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your answer to nearest whole number.) b. What will be the rate of return...
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon...

A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 7.5%, and sells for $1,150. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.) a. If the bond has a yield to maturity of 10.5% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your answer to nearest whole number.) b. What will be the rate of return...
A $1,000 par-value, fixed coupon bond has 17 years remaining until maturity. The bond has an...

A $1,000 par-value, fixed coupon bond has 17 years remaining until maturity. The bond has an annual coupon rate of 8 percent. If the market annual rate for this bond is 7.25 percent, what is the price of the bond? A 20-year bond pays $110 annually on a face value of $1,000. If similar bonds are currently yielding 8%, what is the bond price?

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?...
bond X and bond Y. Bond X has a face value of $1,000 and 10 years...

bond X and bond Y. Bond X has a face value of $1,000 and 10 years to maturity and has just been issued at par. It bears the current market interest rate of 7% (i.e. this is the yield to maturity for this bond). Bond Y was issued 5 years ago when interest rates were much higher. Bond Y has face value of $1,000 and pays a 13% coupon rate. When issued, this bond had a 15-year, so today its...
1. A bond with two years remaining until maturity offers a 3% coupon rate with interest...

1. A bond with two years remaining until maturity offers a 3% coupon rate with interest paid annually. At a market discount rate of 4%, find the price of this bond per 1000 of par value. 2. A bond offers an annual coupon rate of 5%, with interest paid semiannually. The bond matures in seven years. At a market discount rate of 3%, find the price of this bond per 1000 of par value. 3. A zero-coupon bond matures in...

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?
with a face value of $1,000 has 10 years until maturity, carries a coupon rate of...

with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 76%, and sells for $1,140. Interest is paid annually a. If the bond has a yield to maturity of 10.4% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your anser to nearest whole number.) b. What will be the annual rate of return on the bond? (Do not round intermediate calculations. Enter your answer...
Consider a zero-coupon bond with a $1,000 face value and 10 years left until maturity. If...

Consider a zero-coupon bond with a $1,000 face value and 10 years left until maturity. If the YTM of this bond is 10.2%, then the price of this bond is closest to ________. . $378.60 b. $530.04 c. $454.32 d. $1,000 e. $232.96

A bond with 10 years to maturity has a face value of $1,000. The bond can...

A bond with 10 years to maturity has a face value of $1,000. The bond can be called in four years for $1050. The bond pays an 6 percent semiannual coupon, and the bond has a 4.5 percent nominal yield to maturity. What is the price of the bond today assuming that it will be called?