Q1) The AirJet Service Company\'s bonds have four years remaining to maturity. I

Question

Q1) The AirJet Service Company's bonds have four years remaining to maturity. Interest is paid

annually, the bonds have a $1,000 par value, and the coupon interest rate is 8.75%.
(a) What is the yield to maturity at a current market price of $1,108?
(b) Would you pay $935 for one of these bonds if you thought that the market rate of interest
was 9.5%?

----------------------------------------------------------------------------------------------------------------------------------

Q2) A $1,000, 9.50% semiannual bond is purchased for $1,010. If the bond is sold at the end of
three years and six interest payments, what should the selling price be to yield a 10% return
on the investment?

----------------------------------------------------------------------------------------------------------------------------------

i need the answer in excel (using excel functions)if it can

also if you can send the excel answer to my email to see the details for solving the problem

1411@outlook.sa

Explanation / Answer

Q1)

a)

b)

Bond value is higher than bond price. I will pay $930.

1 Face value (FV) $                                        1,000 2 Coupon rate 8.75% 3 Number of compounding periods per year                                                    1 1*2/3 Interest per period (PMT) $                                        87.50 Bond price (PV) $                                     (1,108) 4 Number of years to maturity 4 5 = 4*3 Number of compounding periods till maturity (NPER)                                                    4 Bond yield to maturity RATE(NPER,PMT,PV,FV) Bond yield to maturity 5.66%

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.