|
|
|
|
New Member
|
|
May 8, 2012, 04:30 AM
|
|
A coupon bond that pays interest of $100 annually has a par value of $1,000, matures
A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in 5 years, and is selling today at a $72 discount from par value. The yield to maturity on this bond is __________.
|
|
|
New Member
|
|
May 8, 2012, 04:31 AM
|
|
Calculate a. the value and b. the duration of a $1000 3-year bond if the interest
Calculate
a. the value and
b. the duration
of a $1000 3-year bond if the interest rate is 4%, 5%, 7%, if the bond pays annual interest of 7.5% of the bond’s face value!
|
|
|
BossMan
|
|
May 8, 2012, 04:37 AM
|
|
Please refer to this announcement
Do not simply retype or paste a question from your book or study material
We won't do your homework questions for you.
You were given the assignment for you to learn.
If you come up with your own answer and post it for us to critique that is within reason.
If you have some SPECIFIC questions that you couldn't find or didn't understand, we may help with that.
But this is your assignment, so show us you have at least attempted to complete it on your own.
|
|
|
New Member
|
|
May 8, 2012, 04:40 AM
|
|
Originally Posted by Curlyben
Please refer to this announcement
My apologies, I'm not sure if this is the way I would have to work it out.
PV= 75/1,04+75/1,05ˇ2+1075/1,07ˇ3 not?
|
|
|
New Member
|
|
May 8, 2012, 04:41 AM
|
|
Originally Posted by tipsy4lyf
My apologies, I'm not sure if this is the way i would have to work it out.
PV= 75/1,04+75/1,05ˇ2+1075/1,07ˇ3 not?
I believe from the total I would get the value,
|
|
|
Senior Member
|
|
May 8, 2012, 03:07 PM
|
|
You got it, Tipsy; it's
By the way, as a quick sniff test of the proposed answer, from the fact that since the bond is paying a coupon rate that's greater than any of the involved discount rates, it must be priced at a premium to par. By itself that doesn't prove our answer, but it at least tells us that the value of the bond must be greater than 1,000 rather than < 1,000.
|
|
Question Tools |
Search this Question |
|
|
Add your answer here.
Check out some similar questions!
A bond that pays coupons annually is issued with a coupon rate of 4%
[ 1 Answers ]
Rate of Return. A bond that pays coupons annually is issued with a coupon rate of 4%, matu- rity of 30 years, and a yield to maturity of 7%. What rate of return will be earned by an investor who purchases the bond and holds it for 1 year if the bond's yield to maturity at the end of the year is 8%?
View more questions
Search
|