3. Market Price. What is the market price of a $1,000, 8 percent bond if comparable market interest rates rise to 10 percent and the bond matures in 14 years?
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- What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)What is the market price of a $1,000, 9 percent bond if comparable market interest rates drop to 7 percent and the bond matures in 12 years?how does the equation for valuing a bond change if semiannual payments are made? find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd equal 13%.
- A bond has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. a) If the bond has a yeild to maturity of 9% 1 year from now, what will its price be at that time? b) What will be the rate of return on the bond? c) Now assume that interest is paid semannually. What will be the rate of return on the bond? d) If the inflation rate during the year is 3% what is the real rate of return on the bond?How does the equation for valuing a bond change if semiannual payments are made? Find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd = 13%.Assume a bond with a 10% annual rate has 8 years left to maturity when market rates are at 12%. Assume semi-annual payments. What is the price of the bond at 3 different points in time - today, in 1 year, and in 2 years. Is this a discount or premium bond, and what do you notice about the relationship between the price and maturity value (FV) over time?
- A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. 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 year from now, what will its price be at that time?b) What will be the rate of return on the bond? c) If the inflation rate during the year is 3%, what is the real rate of return on the bond? Assume annual interest payments.What is the price of a 5-year, 8.4% coupon rate, $1,000 face value bond that pays interest quarterly if the yield to maturity on similar bonds is 12.5%?A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. Assume a face value of $1,000 and annual coupon payments. 1) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? 2) What will be the rate of return on the bond? 3) If the inflation rate during the year is 3%, what is the real rate of return on the bond? Please show workings with formulas.
- What is the market price of a $1,000, 8 percent bond if comparable market interest rates rise to 10 percent and the bond matures in 14 years? Round to the nearest cent. DO NOT INCLUDE COMMAS OR $.Consider a bond that has a current value of $1,081.11, a face value of $1,000.00, a coupon rate of 10% and five years remaining to maturity.a. What is the bond’s yield-to-maturity today?b. If the bond’s yield does not change, what is its value one year from today?How is a bond’s value determined? What is the value of a 10-year, $1,000 par value bond with a 10% annual coupon if its required return is 10%?