What is the current value of a $1,000 bond with a 6% annual coupon rate (paid annually) that matures in 5 years if theappropriate discount rate is 2%. Please round your answer to the nearest hundredth.

I have multiplied formula by -1 because bond price is that amount that we pay, so payment goes from…

Answered: What is the current value of a $1,000…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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the following features: • Coupon rate of interest (paid annually): 10 percent • Principal: $1,000 • Term to maturity: 8 years a. What will the holder receive when the bond matures? |-Select- b. If the current rate of interest on comparable debt is 7 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. Would you expect the firm to call this bond? Why? -Select- v, since the bond is selling for a-Select- v. c. If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for eight years if the funds earn 7 percent annually and there is $80 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar.
Calculate the Macaulay Duration for a six-year annual coupon paying bond with a coupon of 3.5 %, priced with a yield to maturity of 5.5%. Assume that you are calculating 10 days after a coupon payment where day count convention is 360 days. (Work to 4 decimal places and then present your answer to 2 decimal places).
Find the present value of a bond with three remaining yearly coupons of $75, beginning today, and a face value of $300, given a stated annual interest rate of 12% compounded monthly.
The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 17.6 percent. Assume interest payments are made semiannually. How would your answer change if the required rate of return is 11.4 percent? (Round final answer to nearest dollar amount.) Present value $Type your answer here
What is the effective yield to maturity of a $1,000 par value strip bond that sells for $255 and will mature in 15 years? (Use a Financial calculator to arrive at the answer. Round the final answer to 2 decimal places.)
What is the total return for each bond in each year? Round your answers to two decimal places. Please answer in the attached format Bond A has a 9% annual coupon, matures in 12 years, and has a $1,000 face value. Bond B has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. Bond C has an 8% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yield to maturity of 9%.
An investor with an investment horizon of 1.4 year(s) purchases a 5% coupon bond with 2 years to maturity and a face value of $100. The bond is trading at a yield of 7%. Coupons are paid semi-annually. What is this investor's duration gap? Assume semi-annual compounding. Round your answer to 4 decimal places.
A person purchased a 10-year, 5 percent coupon (semiannual payments) bond for $1,050.00, what is the (annual) yield-to-maturity? Show the steps in solving it using Financial Calculator.
If you want to receive $500 every three months for 10 years by investing in a bond that has a face value of $10,000 and a yield interest rate of 8% annually, what would be the value of this bond?
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A $1,000 par value bond with an annual 14% coupon rate will mature in 20 years. Coupon payments are made semiannually. What is the market price if the required annual market rate is 7%?
CALCULATE THE DIRTY AND CLEAN PRICE!! For a $100 par value 5-year bond with 8% coupons paid semiannually and bought to yield 10% compounded semiannually, calculate the dirty and clean price 2 years and 10 months after the date of purchase, using the semi- theoretical method. Assume that each month has exactly 30 days.

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What is the current value of a $1,000 bond with a 6% annual coupon rate (paid annually) that matures in 5 years if the appropriate discount rate is 2%. Please round your answer to the nearest hundredth.