4-12. Based on a desired nominal rate of return (yield) of 6%, a bond is purchased for $5,000. The bond matures in 2 years and has a stated rate of 12% nominal interest. What is the face value of the bond? Assume that face value and redemption value are equal. a. $5,000 b. $4,500 c. $4,876 d. $1,652 e. $2,640

Q: Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4…

A: Present value (PV) = P1500 Discount rate (r) = 4% Period (n) = 1 Year

Q: how much will the bond value increase over the next three years?

A: Answer Given N = 20, PMT =1000*5%= 50, FV = 1000, I/Y = 6.5%, CPT PV = -834.72.

Q: Compute the price of the following bonds:   Bond A: Coupon bond, 4% coupon paid semi-annually,…

A: The question is based on the valuation of bond. The price of bond is calculated as present value…

Q: 5% bond with annual coupons, redeemable at 108 at the end of 5 years is priced to yield 4%, m=1.…

A: The amortization of excess premium paid over and above the face value of the Bond is referred to as…

Q: Fingen’s 16-year, $1,000 par value bonds pay 9 percent interest annually. The market price of the…

A: given information Fingen’s 16-year, $1,000 par value bonds annual coupon = 1000 x 9% = 90  market…

Q: The 14 year, $1,000 par value bonds of Waco industries pay 11 percent interest annually, the market…

A: Hi there, Thanks for posting the questions. As per our Q&A guidelines, the solution for first…

Q: An 8 year , $10,000 bond paying a coupon rate of 5.50% compounded semi-annually was purchased at…

A: Using the rate function for YTM calculation

Q: 3. Determine the current yield of a bond whose face value is ₱17,560 and pays a yearly interest of…

A: Face Value = 17560 Price = 16970 Interest % = 8.7% Interest on Bond = Interest% * Face Value…

Q: A bond has a face value of $20, 000 and matures in 10 ye ars. The nominal interest rate is 8.5%.…

A: Bonds are the securities which companies sells to investors to raise funds. On maturity, the…

Q: A 7,000, 5% bond with annual coupons, redeemable at 108 at the end of 5 years is priced to yield 4%,…

A: Premium on Bond issue: A bond that is selling at a premium indicates that its price is trading at a…

Q: Bond A: 10 years to maturity, 0 percent coupon, market interest rate is 10 percent.

A: Bond valuation means the process of determining the fair price of the bond. Fair price is the…

Q: A bond certificate with a value of P 1,081,038.07 has a par value of P 1,000,000.00 and a redemption…

A: Using financial Calculator, PV (Price) = P 1,081,038.07  FV (Face Value) =  P 1,030,000.00 N = 10…

Q: Company A issues a 4-year 7% p.a. semi-annual coupon bond with a face value of $2,000. At issue, the…

A: Face value (F) = $2000 Semiannual coupon (C) = (7% of $2000) / 2 = $70 Bond yield while purchasing…

Q: The yield to maturity of a one- year, $1,000 bond that sells for $710 that requires an interest…

A: YIELD TO MATURITY (YTM) formula: ytm =coupon+par-priceyears to maturitypar +price2

Q: Sheridan, Inc., has issued a three-year bond that pays a coupon rate of 7.0 percent. Coupon payments…

A: We need to use excel pv function to calculate bond price or market value of bond Formula is…

Q: A 9-year bond pays interest of $26.20 semiannually, has a face value of $1000, and is selling for…

A: B0 = Interest * PVCF @ YTM for 18 periods + Maturity Value * PVF @ YTM for 18th period

Q: 7A-13. Vogril Company sold zero-coupon 20-year notes with a 9 percent projected yield to maturity.…

A: The correct option is  C. $90.00

Q: Mr. Cullums has 5-yr semi-annual bonds outstanding that pay a coupon rate of 8.1%, these bonds are…

A: YTM is calculated using excel function =RATE(nper,pmt,pv,fv) Where, nper = total number of payment…

Q: bond

A: Formula to calculate the current yield of the bond is: Current yield = Annual coupon payment/Bond…

Q: Bond Z pays $98 annual interest and has a market value of $870. It has five years to maturity.…

A: Solution Given Annual interest 98 Market value 870 Years to maturity 5 Par…

Q: t20 years, find the coupon payment, redemption value, purchase price and bond premium. (Bond…

A: The given problem can be solved using PV function in excel. PV function computes current price  for…

Q: The one-year interest rates over the next three years are expected to be 5%, 4.5%, and 4%.…

A: Given Information: One-year interest rates = 5%, 4.5% and 4% Liquidity premium = 0%, 0.2% and 0.35%

Q: Assume that the one-year interest rates over the next four years are expected to be 7%, 8%, 9%, and…

A: Liquidity Premium Theory of Interest Rates: According to this theory investors prefer short-term…

Q: A bond has a coupon rate of 9%, term to maturity of 5 years and par value of RM1,000. The coupon is…

A: The change in the price of a bond due to a change in the interest rate is measured by bond duration.

Q: A bond that matures in 6 years has a par value of $1,000, an annualcoupon payment of $80, and a…

A: A financial instrument that has a fixed income and also helps a company to raise funds for business…

Q: Find the Modified duration of the bond if it sells for $1,025.30.

A: Modified Duration: It is a formula that provides an expression of the calculable change in the…

Q: WAY Co., issued a 5-year bond with a face value of ₱50,000 with a coupon rate of 8% annually and a…

A: Convexity of bond shows change in duration of bond with respect change in interest rate in the…

Q: A company issued a 10-year Rp500 million bond that pays annual coupon 10% and records the bond…

A: Present Value of Bonds=Book Value of Bonds×PVIF+Annual Interest×PVAF

Q: A $200,000 bond having a bond rate of 8% payable annually is purchased for $190,500 and kept for 6…

A: Selling price of the bond is the market price for which a bond will be sold off. The selling price…

Q: A 7-year, 10% annual-pay bond has a par value of $1,000. If its yield-to-maturity (YTM) is 12.4%,…

A: Here, Par Value of Bond is $1,000 Time to Maturity is 7 years Coupon Rate is 10% Therefore, Coupon…

Q: Calculate (the present value of) the amount of interest excess or interest deficiency of the…

A: Since the interest is payed semi annually, there will be 10 interest payment and coupon rate would…

Q: 4-year bond, with a face value of $1000, and a coupon rate of 5% (coupon is paid semi-annually), has…

A: Using Excel Rate function

Q: The spade company’s bonds have 4 years remaining to maturity. Interest is paid annually; the bonds…

A: Face value (F) = $1000 Coupon payment (C) = 9% of $1000 = $90 Duration till maturity (n) = 4 years…

Q: A $400,000, 8.50% bond redeemable at par, with semi-annual coupon payments, is purchased 10 years…

A: A financial instrument that doesn’t affect the ownership of the common shareholders or management of…

Q: (5-1) Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid annually,…

A: Par value of bond = $ 1000 Coupon rate = 8% Coupon amount = 1000*0.08 = $ 80 Years to maturity = 12…

Q: (b) Bluechip Company has TWO (2) bonds to evaluate and below are the information:- • Bond A has…

A: Bond A Cash Flow at the time of maturity = RM1,000 Interest (Annuity) annually = (RM1,000 * 10%)…

Q: 5. Determine the amount of semi-annual coupon paid for a 3% bond with a face value of P100,000 which…

A: Amount of semiannual coupon paid = Face value of bonds x rate of interest x no. of months/12

Q: One hundred $1,000 bonds having a bond rate of 8% per year payabie quarterly are purchased for…

A: The following formula will be used:

Q: Construct a bond schedule showing the accumulation of discount on a 6,000 4% bond with quarterly…

A: This question is related to bond valuation. Before the construction of the bond schedule, we have to…

Q: The face Value of the 8.5% bond is $1,000 with a maturity period of 5 years. The bond is selling…

A: Bond duration is referred as the method of measurement for how much the bond prices, which used to…

Q: 6-11 Severn Company's bond has four years remaining to maturity. Interest is paid semiannually, the…

A: Calculation of Yield to Maturity: Excel Spreadsheet: Excel Workings:

Q: A RM1,000 bond matures in 10 years has a coupon rate of 8 percent. Calculate the price of this bond…

A: Face value (F) = RM 1000 n = 10 years Coupon (C) = 8% of 1000 = RM 80

Q: A bond has the following terms: Principal amount $1,000 Semi-annual interest $45 Maturity 15…

A: BOND PRICE FORMULA: PRICE=P1+RN+INTEREST×1-11+RNR

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.