11-year u s. Treasury bond with a ace value of $1,000 oays a coupon ot 5.75% 2.8
ID: 2821763 • Letter: 1
Question
11-year u s. Treasury bond with a ace value of $1,000 oays a coupon ot 5.75% 2.875% of face ale even six months places. a. What is the present value of the bond? Presei vau The eported yleldto ma un s 5.4% a six-month discount rate of 5 4 2 2.7% Do not o nd intermed ate calculat ons Round your answers to 2 deelmal ulations. R to 2 b. i the yield to matunty changes to 1%, what will be the present value? Present vaue C. if the yield to maturity changes to 8%, what wil be the present value? Preseit raue d. ir the yield to maturity changes to 15%, what will be the present value?Explanation / Answer
Using financial calculator BA II Plus - Input details:
a
b
c
d
I/Y = R = Rate or yield / frequency of coupon in a year =
2.700000
0.500000
4.000000
7.500000
PMT = Coupon rate x FV / frequency =
-$28.75
-$28.75
-$28.75
-$28.75
N = Number of years remaining x frequency =
22
22
22
22
FV = Future Value =
-$1,000.00
-$1,000.00
-$1,000.00
-$1,000.00
CPT > PV = Present value of bond =
$1,028.75
$1,493.62
$837.42
$508.95
Formula for bond value = |PMT| x ((1-((1+R%)^-N)) / R%) + (|FV|/(1+R%)^N)
$1,028.75
$1,493.62
$837.42
$508.95
Using financial calculator BA II Plus - Input details:
a
b
c
d
I/Y = R = Rate or yield / frequency of coupon in a year =
2.700000
0.500000
4.000000
7.500000
PMT = Coupon rate x FV / frequency =
-$28.75
-$28.75
-$28.75
-$28.75
N = Number of years remaining x frequency =
22
22
22
22
FV = Future Value =
-$1,000.00
-$1,000.00
-$1,000.00
-$1,000.00
CPT > PV = Present value of bond =
$1,028.75
$1,493.62
$837.42
$508.95
Formula for bond value = |PMT| x ((1-((1+R%)^-N)) / R%) + (|FV|/(1+R%)^N)
$1,028.75
$1,493.62
$837.42
$508.95
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.