2. Marco Chip, Inc. just issued zero-coupon bonds with a par value of $1,000. Th

Question

2.

Marco Chip, Inc. just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 25 years and a yield to maturity of 8.38 percent, compounded semi-annually. What is the current price of the bond?

Round the answer to two decimal places.

3.

Pet Food Company bonds pay an annual coupon rate of 13.67 percent. Coupon payments are paid semiannually. Bonds have 28 years to maturity and par value of $1,000. Compute the value of Pet Food Company bonds if the market interest rate on this type of bond is 10.44 percent.

Round the answer to two decimal places.

Your Answer:

4. You paid $1171 for a corproate bond that has a 10.81 percent coupon rate. What is the bond's current yield?

Round the answer to two decimal places in percentage form

Explanation / Answer

2)

Face value (FV) $                                                         1,000 Coupon rate 0.00% Number of compounding periods per year 2 Interest per period (PMT) $                                                                -   Number of years to maturity 25 Number of compounding periods till maturity (NPER) 50 Market rate of return/Required rate of return 8.38% Market rate of return/Required rate of return per period (RATE) 4.19% Bond price PV(RATE,NPER,PMT,FV) Bond price $                                                       128.44 PV(4.19%,50,0,1000)*-1

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