A 30 year, par value $1,000, floating rate bond was issued in 2008 with a coupon rate of 8%. By the year 2013 rates on bonds with similar risk are down to 6%. What is your best guess as to the value of the bond?
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A 30 year, par value $1,000, floating rate bond was issued in 2008 with a coupon rate of 8%. By the year 2013 rates on bonds with similar risk are down to 6%. What is your best guess as to the value of the bond?
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- Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price? Bond valuation related problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time valu of money variablesYou buy a 9 percent, 25-year, $1,000 par value floating rate bond in 1999. By the year 2004, rates on bonds of similar risk are up to 11 percent. What is your one best guess as to the value of the bond? value of bond?Lantech investor is deciding between two bonds: Bond A pay $72 annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a market value of $910. It has two years to maturity. Par value of the bonds is $1,000. A. What is the current yield on both bonds? B. Which bond should be chosen and why? C. A drawback of current yield is that is doesn't consider the total life of the bond. E.g. Yield to maturity on Bond A is 8.33 percent. What is the yield to maturity on Bond B? D. Is your answer changed from parts B and C based on which bond should be chosen?
- Bond valuation related problems should be solved by using a financial calculator or MS excel spreadsheet. Accordingly, you must show the values of all relevant time value of money variables Findlay company recently issued bonds with a 20-year maturity, a 7.5% semiannual coupon, and a par value of $1,000. The going interest rate (kd, rd) is 6.0%, based on semiannual compounding. What is the bond's price?The callable bond has a par value of 100LT,8% coupon rate and five years to maturity. The bond makes annual interest payment. Investors purchased this bond for 90 LT when it was issued in May 2008. A. What is the yield-to-maturity of this bond? B. What is the duration of this bond if currently it's market price is 95 LT? C. If this bond would be called in May 2010 for 98 LT, what would be the yield-to-call of this bond?A bond has 10 years remaining to maturity, pays annual coupons (yesterday) of $6, and has a face value of $100. The current price of the bond is $125.591 and the price next year is expected to be $123.358. (Interest rates are not expected to change over the coming year.) What is the yield to maturity on the bond?
- Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment? Complete the steps below using cell references to given data or previous calculations. In some cases, a simple cell reference is all you need. To copy/paste a formula across a row or down a column, an absolute cell reference or a mixed cell reference may be preferred. If a specific Excel function is to be used, the directions will specify the use of that function. Do not type in mumerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Make your computations only in the blue cells highlighted below. In all cases, unless otherwise directed, use the earliest appearance of the data in your…There is a bond that has a quoted price of 940.023 and a par value of $1,000. The coupon rate is 7 percent and the bond matures in 13 years. The bond makes semiannual coupon payments a) Will the YTM be greater or less than the coupon rate? Explain your reason why b) Calculate the 7TM for the bond. Please be sure to show your calculations (if using a financial calculator, provide the input values used)Consider a $1,000-par-value Bond with the following characteristics: a current market price of $761, 12 years until maturity, and an 8% coupon rate. We want to determine the discount rate that sets the present value of the bond’s expected future cash-flow stream to the bond’s current market price. You are required to determine the discount rate that equates the present value of the bond?
- 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.)Consider a P1,000 par value bond issued by MERALCO with maturity date of 2026 and a stated coupon rate of 8.5%. On January 1, 2007, the bond had 20 years left to maturity, and the market's required yield to maturity for similar rated debt was 7.5%. Based on the market's required yield to maturity, what is the value of the bond? STEP 1: Timing and Amount of cash flows STEP 2: Determine the YTM discount rate STEP 3: Compute for the PV of cash flowsExcellent Berhad has bonds on the market with 14.5 years to maturity, a YTM of 5.3%,a par value of RM1,000 and a current price of RM1,045. The bonds make semiannualpayments. What must the coupon rate be on these bonds? Using Financial calculator BA II
