#3Assume a par value of $1,000. Caspian Sea plans toissue a 11.00 year, semi-annual pay bond that has acoupon rate of 14.00%. If the yield to maturity for thebond is 14.0%, what will the price of the bond be?SubmitAnswer format: Currency: Round to: 2 decimal places.unanswerednot_submittedAttempts Remaining: Infinity# 4A bank offers 6.00% on savings accounts. What is theeffective annual rate if interest is compounded monthly?SubmitAnswer format: Percentage Round to: 4 decimal places(Example: 9.2434%, % sign required. Will acceptdecimal format rounded to 6 decimal places (ex:0.092434))unanswerednot_submittedAttempts Remaining: Infinity

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# 3 Assume a par value of $1,000. Caspian Sea plans to issue a 11.00 year, semi-annual pay bond that has a coupon rate of 14.00%. If the yield to maturity for the bond is 14.0%, what will the price of the bond be?

# 3 Assume a par value of $1,000. Caspian Sea plans to issue a 11.00 year, semi-annual pay bond that has a coupon rate of 14.00%. If the yield to maturity for the bond is 14.0%, what will the price of the bond be?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter14: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6DTM

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a. Reset the Data Section to its initial values. The price of this bond is 1,407,831. What would it be if there were only 9 or 8 years to maturity? Use the worksheet to compute the bond issue prices and enter them in the spaces provided. Bond issue price (9 years to maturity) __________________ Bond issue price (8 years to maturity) __________________ b. Compare these prices to the bond-carrying values found in the effective interest amortization schedule you originally printed out in requirement 3. Explain the similarity. c. Click the Chart sheet tab. The chart presented shows the price behavior of this bond based on years to maturity. Explain what effect years to maturity has on bond prices. Check your explanation by trying 8% as the effective rate (cell E10) and clicking the Chart sheet tab again. Also try 9%. When the assignment is complete, close the file without saving it again. Worksheet. Modify the BONDS3 worksheet to accommodate bonds with up to 20-year maturity. Use your new model to determine the issue price and amortization schedules of a 2,000,000, 18-year, 10% bond issued to yield 9%. Preview the printout to make sure that the worksheet will print neatly, and then print the worksheet. Save the completed file as BONDST. Hint: Expand both amortization schedules to 20 years. Expand the scratch pad to 20 years. Modify FORMULA1 in cell F17 to include the new ranges. Chart. Using the BONDS3 file, prepare a line chart that plots annual interest expense over the 10-year life of this bond under both the straight-line and effective interest methods. No Chart Data Table is needed. Put A23 to A32 in the Label format and then select A23 to A32, D23 to D32, and B40 to B49 as a collection. Enter all appropriate titles, legends, formats, and so forth. Enter your name somewhere on the chart. Save the file again as BONDS3. Print the chart.
Bond Valuation and Interest Rate Risk The Garraty Company has two bond issues outstanding. Both bonds pay 100 annual interest plus 1,000 at maturity. Bond L has a maturity of 15 years, and Bond S has a maturity of 1 year. a. What will be the value of each of these bonds when the going rate of interest is (1) 5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment to be made on Bond S. b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)?
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 32. The market price of a $1000 par value, semi-annual payment bond is $956.76. If this bond has 27 yearsremaining to maturity and a yield to maturity of 7.30%, what is the bond’s annual coupon rate? (Record youranswer rounded to 2 decimal places; for example, record 0.1493824 = 14.93824% as 12.94).33. The market price of a $1000 par value, quarterly (i.e., 4 times per year)v payment bond is $928.39. If thebond has 21 years to maturity and an annual coupon rate of 9.20%, what is the bond’s yield-to-maturity?(Record your answer rounded to 2 decimal places; for example, record 0.1493824 = 14.93824% as 12.94).
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 30. Redstar Air plans to issue a $1000 par value, 12-year, quarterly (i.e., 4 times per year) payment bond with anannual coupon rate of 6.52%. If the bond’s yield to maturity is 4.82%, what will Redstar Air’s bond sell for?31. Graystar Air plans to issue a $1000 par value, 24-year, monthly (i.e., 12 times per year) payment bond withan annual coupon rate of 12.2%. If the bond’s yield to maturity is 14.4%, what will Graystar Air’s bond sellfor?
A bank has issued a six-month, $1.0 million negotiable CD with a 0.53 percent quoted annual interest rate (iCD, sp). a. Calculate the bond equivalent yield and the EAR on the CD. b. How much will the negotiable CD holder receive at maturity? c. Immediately after the CD is issued, the secondary market price on the $1 million CD falls to $998,900. Calculate the new secondary market quoted yield, the bond equivalent yield, and the EAR on the $1.0 million face value CD. Required A: Bond Equivalent Yield ___ EAR____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 3 decimal places.) Required B: CD Holder will receive at maturity_____(Do not round intermediate calculations. Round your answer to nearest whole number.) Required C: Bond Equivalent Yield____ Secondary Market Quoted Yield______ EAR_____ (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 4 decimal places.
What is the bond equivalent yield on a $1 million T-bill that currently sells at 96.9 percent of its face value and is 344 days from maturity? (Do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))
An investor invested in a 4-years, 4 percent EuroLBP bond sells at par. A comparable risk 4 years, 5.5 percent LBP/dollar dual currency bond pays $666.66 at maturity per LBP1,000,000 of face value. It sells for 1,200,000. Required: Calculate the implied LBP/$ exchange rate at maturity.
Roundall dollar answers to 2 decimal places and record all interest rate, coupon rate and growth rate answers as a percentrounded to one decimal place 34. Pennypacker Industries needs to raise $40,000,000 by issuing bonds. The company plans to issue a $1000 parvalue, 16-year semi-annual payment bond that has a coupon rate of 4.40%. The yield to maturity on the bondis expected to be 4.70%. How many bonds must Pennypacker Industries issue? Round your answer up to thenearest whole number (i.e., no decimal places); for example, enter 112,304.874 or 112,304.128 as 112305.35. Compute the price of a $5000 par value bond with a coupon rate of 7.15% (semi-annual payments) and 29years remaining to maturity. Assume that the current yield to maturity on the bond is 8.60%
A five-year, 6.5 percent Euroyen bond sells at par. A comparable risk five-year, 8.0 percent yen/dollar dual-currency bond pays $838.33 at maturity. It sells for ¥110,000. What is the implied ¥/$ exchange rate at maturity? Hint: The dual-currency bond pays 8.0 percent on a notional value of ¥100,000, whereas the par value of the bond is not necessarily equivalent to ¥100,000. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
A P1O0,000 semi-annual government bond is currently selling at 98 if the coupon rate is 8% and its maturity is 5 years, answer the following: a What is the current price of the bond? b. What is the Yield to maturity? Round-off final answer only to two decimal places. c.What is the coupon yield of the bond? Round-off final answer only to two decimal places. d.Assume a YTM of 10% and quarterly coupon payment. compute the price of the bond. Round-off final answer only to two decimal places.