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Submitted by KnowledgeCats on Thu, 2013-10-24 00:10
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PV related 5 Questions

1. Suppose a corporation’s bonds have 8 years remaining to maturity. In addition, suppose the bonds have a $1000 face value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 10%. Compute the market price of the bonds if interest is paid annually.



2. Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?



3. Consider some bonds with one annual coupon payment of 7.25%. The bonds have a par value of $1,000, a current price of $1,125, and they will mature in 13 years. What is the yield to maturity on these bonds?



4. What is the yield to maturity for a zero coupon bond that matures in 14 years if the bond is selling for $530.00? Assume the maturity value of the bond to be $1,000.



5. A bond carries a 9 percent coupon, pays interest semiannually, and has 10 years to maturity. What is the bond's yield to maturity if the bond is selling for $937.75 (rounded to the nearest whole percent)?

Answer
Submitted by KnowledgeCats on Thu, 2013-10-24 00:11
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100% Correct Solution for PV related 5 Questions

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xxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xx Suppose a xxxxxxxxxxx’s xxxxx xxxx x years xxxxxxxxx xx maturity. In xxxxxxxxx suppose xxx bonds have x xxxxx face value, xxx xxx coupon interest xxxx xx xxx xxx xxxxx xxxx a yield xx xxxxxxxx xx xxxx Compute xxx market xxxxx of the bonds if interest xx xxxx annually.
Rate (Yield) xxxxxx
NPER x
PMT70
FV1000
xx xxxxxxx xxxxxx $839.95 xxxxxxxxxxxxxxxxxxxx
xx xxxxxx that xxx are xxxxxxxxxxx the xxxxxxxx of a xxxxxxx bond xxxx xx xxxxxx coupon rate xx xxxxx The bond has face value xx $1,000 and xxxxx semiannual interest payments. xx xxx require xx xxxxx nominal xxxxx to maturity xx this investment, xxxx is the xxxxxxx price xxx should be willing xx pay for xxx xxxxx
xxxx (Yield)xxxxx(11%/2)
xxxx xx xxx xxx
xxxxxxx (1000 x xxxxxxx
xxxxxx
PV xxxxxxx $891.00PV(Rate,NPER,PMT,FV)
3. xxxxxxxx some bonds xxxx xxx xxxxxx xxxxxx xxxxxxx of 7.25%. xxx bonds xxxx x xxx xxxxx of $1,000, a xxxxxxx price of xxxxxxx xxx xxxx will mature in

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