BA Corp is issuing a 10-year bond with a coupon rate of 8 percent and a par valu
ID: 2778483 • Letter: B
Question
BA Corp is issuing a 10-year bond with a coupon rate of 8 percent and a par value of $1,000. The market interest rate on similar bonds is currently 6 percent. If the coupon payments are made annually, what is the value of this bond?
Knight, Inc. has issued a 3-year bond with a $1,000 par value and an annual coupon rate of 6 percent. The current market rate of interest is 5 percent. What is the value of this bond if the coupon payments are made semiannually?
Diane Carter is interested in buying a 5-year zero coupon bond with a face value of $5,000. If the market interest rate on these types of bonds is currently 9 percent, what is the current price of this bond?
Rudy Sandberg wants to invest in 4-year bonds that are currently priced at $933.76. The bonds have a coupon rate of 6 percent and annual coupon payments. If the par value of the bonds is $1,000, what is the bond's yield-to-maturity?
You own a 5-year bond with a face value of $1,000 and a coupon rate of 5 percent with annual payments. The bond is currently worth $810.46. If market interest rates remain unchanged, what will be the value of the bond next year when there are 4 years left until maturity?
Explanation / Answer
N=9
PV=1000
PMT=80
FV=1025
YTM=
=I/YR=YTM=7.2157%= 7.22%
======================
N=7
=I/YR=7.2157%= 7.22%
PMT=80
FV=1025
PV=
Vb=PV =988.46
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