Find the value of a 5.9% Coupon Bond with a required return of 12.21% and 20 years to maturity. Keep 2 decimal places and enter the positive numeric part only. E.g. If your calculator result is $-123.456, enter 123.46.
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- Suppose you looking at a certain bond whose current market price is $935. The bond has a 6.00% coupon rate, pays annual coupon payments and has a 12 year maturity. Assume also that the current open market YTM is 7.00%. Based upon this information, answer the following questions. [3 parts] Show all work. Clearly label your answers for Part A, Part B, and Part C. Carry all calculations out to four (4) decimal places (except dollars and cents). Highlight in bold your answer. a) Based upon the bond’s features, determine what the bond’s current price ($) should be. (Use the present value method to determine the price) b) Based upon your calculated price in Part 1, is the open market price of the bond correct? If the bond is over/under priced, by how much is the bond mispriced? c) Based strictly upon your answer in part 2, would you buy the bond? Explain your answer.Assume that the risk free rate is equal to 0.04. The corporate bond rate for a risky bond is 0.11. Assume a recovery rate of 0.33. All rates in this problem are stated as decimals. Using the precise calculation formula, calculate λ , the probability of default. Round your answer to three decimal places, and state as a decimal. Please answer fast i give you upvote.Consider a bond that has a price of $1046.76, a coupon rate of 8.8%, a yield to maturity of 8.1%, a face value of $1000, and 10 years to maturity. What is the current yield? Enter your answer as a percentage. Do not include the percentage sign in your answer. Enter your response below. Enter your answer to 2 DECIMAL PLACES. Number %
- Consider the market rates for the maturities 1, 2, and 3 years respectively in the table below. What is the price of a 3-year bond with annual payments, coupon rate equal to 9.50% and face value equal to $68,000. Answer with two decimal digits accuracy. Example: 74929.05 t 1 2 3 R(0,t) 1.95 2.90 4.40 Blank Excel Worksheet Your Answer: AnswerCalculate YTC using a financial calculator by entering the number of payment periods until call for N, the price of the bond for PV, the interest payments for PMT, and the call price for FV. Then you can solve for 1/YR YTC. Again, remember you need to make the appropriate adjustments for a semiannual bond and realize that the calculated 1/YR is on a periodic basis so you will need to multiply the rate by 2 to obtain the annual rate. In addition, you need to make sure that the signs for PMT and FV are identical and the opposite sign is used for PV; otherwise, your answer will be incorrect. A company is more likely to call its bonds if they are able to replace their current high-coupon debt with less expensive financing. A bond is more likely to be called if its price is above par-because this means that the going market interest rate is less than its coupon rate. Quantitative Problem: Ace Products has a bond issue outstanding with 15 years remaining to maturity, a coupon rate of 8.4%…Suppose that you purchase a bond from a company that promises to pay $52.66 in coupon payments for the next 6 years, with a maturity bonus of $152.05 What is the total amount of money that this bond will pay out over its Motime? Round your answer to two (2) decimal places if necessary and do not include a dollar sign Plz do fast
- If you have a coupon bond, its face value is $1,000 and the coupon rate is 4%. Complete the following table, then calculate the rate of return for the bond. If you know that it was purchased at the nominal value, comment on the results. due date return at maturity the price 2 0.02 3 0.04 5 0.06 Present Value Annuity value % n value % n 0.961 0.02 2 1.97 0.02 2 0.925 0.04 2 1.89 0.04 2 0.889 0.04 3 2.78 0.04 3 0.906 0.02 5 4.71 0.02 5 0.747 0.06 5 4.21 0.06 5Use of a financial calculator or Excel (functions PRICE and YIELD will be helpful) will be helpful to calculate the following problems. Show your work, include your calculator entries (i.e. N, PV, PMT, FV, IM, and/or Excel formulas where applicable. 1. Suppose there is a bond with a par value of $1,000 that matures in 6 years. Coupon payments are made annually. The coupon rate is 9%. It has a 12% yield to maturity. The annual coupon payments = $ b. The price of the bond today (present value) = $Unlike the coupon interest rate, which is fixed, a bond's yield varies from day to day depending on market conditions. To be most useful, it should give us an estimate of the rate of return an investor would earn if that investor purchased the bond today and held it for its remaining life. There are three different yield calculations: Current yield, yield to maturity, and yield to call. A bond's current yield is calculated as the annual interest payment divided by the current price. Unlike the yield to maturity or the yield to call, it does not represent the actual return that investors should expect because it does not account for the capital gain or loss that will be realized if the bond is held until it matures or is called. This yield was popular before calculators and computers came along because it was easy to calculate; however, because it can be misleading, the yield to maturity and yield to call are more relevant. The yield to maturity (YTM) is the rate of return earned on a…
- Assume coupons are paid annually. Here are the prices of three bonds with 10 year maturities. Assume face value is $100. Bond Coupon a. What is the yield to maturity of each bond? b. What is the duration of each bond? Complete this question by entering your answers in the tabs below. Required A Required B What is the duration of each bond? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 8%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)Consider a bond that has just paid a semi-annual coupon and has exactly 2.5 years to maturity and an annual coupon rate of 3.5%. Price the bond with a yield 4.2%. This is an annuity calculation and the stated yield and stated coupon are double the semi-annual yield and coupon. Use Table 6.1. (Do not round Intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign In your response.) Price of the bond $