1. What is the price of a $1,000 par value bond with an 8% coupon rate paid annu
ID: 2657044 • Letter: 1
Question
1. What is the price of a $1,000 par value bond with an 8% coupon rate paid annually, if the bond is priced to yield 8% and has 9 years to maturity?
2. What would be the price of the bond in #1 if the yield decreased to 6%?
3. What would be the price of the bond in #1 if the yield rose to 10% and was callable at 110% of par in 4 years?
4. What is the yield to maturity for a Zero Coupon Bond that has 15 years left to maturity and is selling for $209?
Explanation / Answer
What is the price of a $1,000 par value bond with an 8% coupon rate paid annually, if the bond is priced to yield 8% and has 9 years to maturity?
Answer is $1000
As the YTM and Coupon Rate is Same the issue will bw at face value
2
What would be the price of the bond in #1 if the yield decreased to 6%?
. What would be the price of the bond in #1 if the yield rose to 10% and was callable at 110% of par in 4 years?
What is the yield to maturity for a Zero Coupon Bond that has 15 years left to maturity and is selling for $209?
RATE = ?
NPER=15
PMT =0
PV=-209
FV=1000
=RATE(15,0,-209,1000)
=11.00%
Amount PV factor PV Interest Payment 80 6.8017 544.14 Maturity Value 1000 0.5919 591.90 Value of Bond 1,136.03Related Questions
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