Bond Terms Par Value Duration (yrs) Coupon Frequency $1,000 4.25% Semiannual Current rates: 5.00% Bond features: MACd Modified Duration Callable at Par 4.548 4.437 Using the bond data above, assuming a 1% increase in current interest rates, what is the effective duration of the bond? Round to two decimal places

Bond Terms Par Value Duration (yrs) Coupon Frequency $1,000 4.25% Semiannual Current rates: 5.00% Bond features: MACd Modified Duration Callable at Par 4.548 4.437 Using the bond data above, assuming a 1% increase in current interest rates, what is the effective duration of the bond? Round to two decimal places

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter11: Bond Pricing And Amortization (bonds)

Section: Chapter Questions

Problem 8R: a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it...

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a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
Bond Terms Par Value Duration (yrs) Coupon Frequency Current rates: Bond features: MACD Modified Duration $1,000 4 4.00% Semiannual 4.75% Callable at Par 3.732 3.645 Using the bond data above, if interest rates decreased by 1%, how much will the value of the bond change (expressed as a percentage, rounded two decimals)?
Bond Terms Par Value Duration (yrs) Coupon Frequency Current rates: $1,000 5 4.00% Semiannual Bond features: MACA Modified Duration 4.75% Callable at Par 4.572 4.466 Assuming this bond is the only asset, if the market value of liabilities was $850, what is the economic value of equity?
Question 1. Duration and Banking Consider a 5-year bond with annual coupon payments. The bond has a face value (prin- cipal) of $100 and sells for $95. Its coupon rate is 3%. (The coupon rate is the ratio between the coupon value and the face value). The face value is paid at the maturity year in addition to the last coupon payment. 1. Calculate the bond's yield to maturity (YTM) and duration using its YTM. 2. Suppose the bond's YTM changes in the same way as a 5-year T-bill interest rate. Use the bond's modified duration to evaluate the relative change in the 5-year bond's value if the interest rate on 5-year T-bills falls by one basis point, that is, by 0.0001. This part was extracted from the balance sheet of the First Bank of Australia: Assets (Billion AUD) Bond 80 Liabilities (Billion AUD) Fixed-rate liabilities 60 where "Bond" here refers to the bond we specified above and the fixed-rate liabilities (banks future payment obligations) have an average duration of 4 years and YTM of…
K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {
Bond valuationSemiannual interest Calculate the value of each of the bonds shown in the following table all of which pay interest semlannua below in order to copy its contents into a spreadsheet Coupon interest rate Years to maturity Required stated annual retum Bond Par Value $1.000 500 500 A B 12 14 The value of bond A is S710 98| (Round to the nearest cent.)
Yield to maturity The bond shown in the following table pays interest annually. Coupon interest rate Years to maturity Par value $100 13% 19 Current value $140 a. Calculate the yield to maturity (YTM) for the bond. The yield to maturity (YTM) for the bond is nothing % (Round to two decimal places.) b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.
2. Characteristics of bonds C. If the coupon interest rate is 4.375% for the first six months and changes to a rate equal to the 10-year Treasury bond rate plus 1.3% thereafter, the bond is called a bond. D. Which feature of a bond contract allows the issuer to redeem a bond issue immediately in its entirety at an amount greater than par value prior to maturity? Put provision Deferred call provision Call provision Convertible provision E. When are issuers more likely to call an outstanding bond issue? When interest rates are higher than they were when the bonds were issued When interest rates are lower than they were when the bonds were issued
K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): Period 0 2 Cash Flows $19.12 $19.12 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) 39 $19.12
Bond Valuation-Semiannual Interest: Calculate the value of each of the bonds shown in the following table, all of which pay interest semiannually. Bond Per Value Coupon Interest Rate Years to Maturity Required stated annaul return A $1,000 9% 9 11% B 500 13 20 12 C 500 12 5 15 The value of bond A is? The value of Bond B is? The value of Bond C is? Remember to round all answers to the nearest cent.
K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): Period 2 Cash Flows 1 $20.34 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? $20.34 a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) b. What is the coupon rate (as a percentage)? The coupon rate is%. (Round to two decimal places.) c. What is the face value? The face value is $ (Round to the nearest dollar.) 19 $20.34 20 $20.34 + $1,000
What is the YTM of the bond given the information below. The bond makes annual interest payments. (Do not round intermediate calculations, round answer to two decimals, i.e. 32.16) Coupon Rate:8.4% Maturity (years):6 Current Price: $1,159.63 Par value: $1,000.00