1 a, A $1,000 par value 10-year bond with a 10 percent coupon rate recently sold
ID: 2795649 • Letter: 1
Question
1
a, A $1,000 par value 10-year bond with a 10 percent coupon rate recently sold for $900. The yield to maturity is:
b. The interest on corporate bonds in the United States is typically paid:
c. What is the current yield of a 9 year bond issued by Sarah Goldberg, Inc. that pays a coupon rate of 20%per year, has a $1,000 par value, and is currently priced at $1,407? Round youranswer to the nearest whole percent and assume annual coupon paymen ;
d. Stormy, Inc. has issued a 12% coupon bond that is to mature in 9 years. The bond had a$1,000 par value and interest is due to be paid semi-annually. If your required rate of return is 10%, what price would you be willing to pay for the bond?
e. Calculate the value of a bond issued by Tamika, Inc. that is expected to mature in 13 years with a $1,000 face value. The interest coupon rate is 8%, and the required rate of return is 10%. Interest is paid annually.
f. Victoria, Inc. just issued $1,000 par 20-year bonds. The bonds sold for $936 and pay interest annually. Current yield on the bond is 15%. What is the amount of the annual interest payment on the bonds?
Explanation / Answer
1)A $1,000 par value 10-year bond with a 10 percent coupon rate recently sold for $900. The yield to maturity is: FV $1,000.00 Coupon Payment = PMT = $1000 x 10% 100 Period 10 PV $900.00 YTM = Rate(10,100,-900,900) 11.75% 2)The interest on corporate bonds in the United States is typically paid Semiannually 3)What is the current yield of a 9 year bond issued by Sarah Goldberg, Inc. that pays a coupon rate of 20%per year, has a $1,000 par value, and is currently priced at $1,407 Current Yield = $1000 x 20%/$1407 14.21% 4)Stormy, Inc. has issued a 12% coupon bond that is to mature in 9 years. The bond had a$1,000 par value and interest is due to be paid semi-annually. If your required rate of return is 10%, what price would you be willing to pay for the bond? FV $1,000.00 Coupon Payment = PMT = $1000 x 12%/2 60 Period = 9 x 2 18 YTM = 10%/2 5.00% Current Price = PV(5%,18,-60,-1000) $1,116.90 5) e. Calculate the value of a bond issued by Tamika, Inc. that is expected to mature in 13 years with a $1,000 face value. The interest coupon rate is 8%, and the required rate of return is 10%. Interest is paid annually. FV $1,000.00 Coupon Payment = PMT = $1000 x 8% 80 Period = 13 YTM = 10.00% Current Price = PV(5%,18,-60,-1000) $857.93 6)f. Victoria, Inc. just issued $1,000 par 20-year bonds. The bonds sold for $936 and pay interest annually. Current yield on the bond is 15%. What is the amount of the annual interest payment on the bonds? Current Yield = Annual interest/ Current price 15% = Annual Interest/$936 Annual Interest = 936 x 15% $140.40
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.