Twenty-five-year B-rated bonds of Parker Optical Company were initially issued a
ID: 2797608 • Letter: T
Question
Twenty-five-year B-rated bonds of Parker Optical Company were initially issued at a 12 percent yield. After 10 years, the bonds have been upgraded to Aa2. Such bonds are currently yielding 16 percent to maturity. Use Table 16-2. Determine the price of the bonds with 15 years remaining to maturity.
Interest rates and bond prices (face value is $1,000 and annual coupon rate is 12%) Table 16-2 Rate in the Market (%)--Annual Yield to Maturity" 10% 2 Years to Maturity 12% 14% 16% 8% $1,037.72 $1,018.59 $1,000.00 $981.92 $964.33 $1,345.84 $1,153.72 $1,000.00 $875.91 $774.84 $1,429.64 $1,182.56 $1,000.00 $861.99$755.33 4 15 25 6 +PV(F2/2,A5*2,-120/2,-1000) +PV(rate,nper,pmt,[fvj)Explanation / Answer
B C D E F G 2 The formula in table shows the price of bond where coupons are paid semi-annually 3 for annual 12% coupon rate payments 4 5 Yield Rates 6 YTM 8% 10% 14% 16% 7 1 Rs. 1,037.04 Rs. 1,018.18 Rs. 982.46 Rs. 965.52 8 15 Rs. 9,586.62 Rs. 1,152.12 Rs. 877.16 Rs. 776.98 (Answer) 9 25 Rs. 11,955.75 Rs. 1,181.54 Rs. 862.54 Rs. 756.12 10 =PV(F6,B9,-120,-1000) 11 12 Price of 15 yr bond Yielding 16% = Rs. 776.98 13 Please provide feedback…. Thanks in advance…. :-)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.