Answered: Mr.Bond has a coupon rate of 5%…

Mr.Bond has a coupon rate of 5% (interest paid annually) and maturity of 6 years. If the current price of bond is $820.56, calculate the yield to maturity of the bond.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

See similar textbooks

Related questions

Q: A bond has a coupon payment of $22 every 6-months. It is trading at 98.6, is rated BBB, and has 8…

A: Bonds are the liabilities of the company which is issued to raise the funds required to finance the…

Q: A bond has a $13,000 face value, a 6-year maturity, and a 3.05% coupon. Find the total of the…

A: Face value= $13000 Number of interest payments = 6 Coupon rate = 3.05%

Q: ABC Motors' bonds have 19 years remaining to maturity. Interest is paid semi-annually, they have a…

A: Data given:: Par Value = $1,000 Coupon interest rate = 5% (paid semi-annually) = 5%/2 = 2.5% = 0.025…

Q: Carrie's clothes, has a five year bond oustanding that pay $60 annually. The face value of each bond…

A: a.Calculation of Coupon Rate of Bond:

Q: A 11-year bond pays interest of $28.60 semiannually, has a face value of $1,000, and is selling…

A: Semi Annual Interest Time Period = 11 Years × 2 =22 semi annual periods Face Value = 1000 Price of…

Q: The face value of a bond is $7,000, and the annual coupon payment is $385. The coupon rate is .

A: In the given problem we require to calculate the coupon rate of bond from the following details:…

Q: You want to find the value of a corporate bond with an annual coupon rate of 6%, making semi-annual…

A: value of bond is the present value of cash inflows discounted at yield

Q: bond will mature in 5-y

A: Bond refers to the acknowledgment of debt. It is a promise to pay a fixed sum at some future date.…

Q: Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon…

A: Bond price is the current worth of the future payments to be made. Future payments include coupon…

Q: Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a…

A: The coupon is paid on the face value of the bond. Therefore, the coupon of the bond is calculated…

Q: You intend to purchase a 2-year bond. The bond has a $1,500 face value and coupon payments are…

A: Given: Year = 2 Interest rate = 4% Market rate = 18% Face value = $1,500

Q: Bernard co. has 7% coupon bonds on the market that have 13 years left to maturity. The bonds will…

A: Current bond price will be equal to present value of Maturity Value and present value of interest…

Q: A bond with a $20,000 face value has a 4.5% coupon and a 10-year maturity. Calculate the total of…

A: The formula concept is:

Q: A 20-year Treasury bond is issued with face value of $1,000, paying interest of $68 per year. If…

A: Coupon rate can be calculated by using this equation. Coupon rate =InterestFace value*100

Q: A $2,000 bond with 8 years to maturity is currently selling for $2,055. If the yield to maturity is…

A: Face Value of Bond = $2000 Coupon Rate = x% Coupon Amount = 2000*x% Yield Rate = 9.5% Current Price…

Q: As with most bonds, consider a bond with a face value of $1,000. The bond's maturity is 21 years,…

A: We require to calculate the bond value in one year i.e. after one year in this question from…

Q: a bond is listed today has a maturity date exactly 5 years from now and a face value of 10,000pesos.…

A: The expected price of the bond is the present value of its expected future cash flow which is…

Q: A Baxter, Inc.'s bond has a 4 percent coupon and pays interest semi-annually. The face value is…

A: Details given are as follows: Coupon rate = 4% Face value =$1000 Current price (Present value) =…

Q: A 15-year Treasury bond is issued with face value of $1,000, paying interest of $58 per year. If…

A: The coupon rate can be calculated as:

Q: A 3-year bond with 12% coupon rate and Rs.1000 face value has the yield to maturity of 8%. Assuming…

A: Bond is a debt instrument issued by companies and government. It is a fixed income instrument which…

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 20-year bond has a coupon rate of 6% annually and a principal of $1,000.00. Alternative bonds are…

A: Value of bond is present value of coupon payment plus present value of par value.

Q: Carries Clothes, Inc. has a five -year bond outstanding that pays $60 annually. The face value of…

A: Given that;Face value is $1,000Annual coupon payment is $60Current price or present value of the…

Q: Footsteps Co. has a bond outstanding with a coupon rate of 5.2 percent and annual payments. The bond…

A: Excel Spreadsheet:

Q: A three-year bond is issued with a 9% coupon paid annually, and a maturity value of £100. If the…

A: Par value = £100 Coupon rate = 9% Coupon rate = 100*0.09= £9 Yield to maturity = 12% Years to…

Q: Hizzy Corp. bonds bearing a coupon rate of 15%, pay coupons semiannually, have three years remaining…

A: Bond price = $988 Face value = $1000 Coupon rate = 15% Semi annual coupon amount = 1000*0.15/2 = $75…

Q: ABC Corp issued a bond with a maturity of 12 years. It has a 9 percent annual coupon, a yield to…

A: Face value (FV) = P1000 Coupon rate = 9% Yield to maturity (r) = 8% Years to maturity (n) = 12 Years…

Q: The current yield on the bond is b) The yield to maturity of the bond is

A: Current Yield on Bond: It is estimated by dividing the annual coupon payments by the price of the…

Q: Iris Corp issued bonds with a coupon rate of 15%, pay coupons annually, have 6 years remaining to…

A: YEARS 6 COUPON RATE 15% PRESENT VALUE $950 FACE VALUE $1,000 PMT (MONTHLY PAYMENT) $150

Q: What is the current price and Macaulay's duration of a $1,000, 8% coupon bond that pays interest…

A: Calculation of current price and Macaulay’s duration:The bond price is $895.64, and Macaulay’s…

Q: A bond makes two $45 coupon payments each year. Given the bond's par value is $1,000 and its price…

A: Given, Semi -annual coupon =$45

Q: The face value of the bond is $10,000 with annual coupon payment. The maturity period is 6 years…

A: The bond duration is used to measure the actual time it takes for the bond to recover its costs…

Q: A bond has a $13,000 face value, an 8-year maturity, and a 3.05% coupon. Find the total of the…

A: Bonds are debt instruments with a fixed interest payment over its life or maturity.The fixed…

Q: You purchased a bond for 725. The bond has a coupon rate of 8 percent, which is paid semiannually.…

A: Expected rate of return is Yield to maturity. Data given: ( Assumed all figures are in $) i) Face…

Q: What is the duration of a five-year bond with a coupon rate of 7%, a yield to maturity of 8%, a…

A: Given: Years = 5 Coupon rate = 7% Yield to maturity = 8% Face value = $1,000

Q: A bond has a $1,000 face value, a market price of 1,036, and pays interest payments of $70 every…

A: Given details are : Face value = $1000 Market price = $1036 Interest payment every year = $70 From…

Q: Yegurt Ine has issued a 30-year par value bond that is callable in 5 years. If the coupon rate in…

A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type])…

Q: You are given the following information aboutr a 20 year bond with face amount 4000. The bond has an…

A: A coupon bond is a debt obligation in which the coupons are also attached.

Q: Madsen Motors’s bonds have 23 years remaining to maturity. Interestis paid annually, they have a…

A: using financial calculator N (no. of years) =23 I/Y (rate)= 11% PMT (coupon payment) = 1000*9% =-90…

Q: Madsen Motors's bonds have 5 years remaining to maturity. Interest is paid annually, they have a…

A: Time Period = % years Coupon Rate = 6% YTM = 7% Par Value = $1,000

Q: A 15-year bond has a $1,000 par value bond, a 4 percent coupon, and a yield to maturity of 3.3…

A: Calculating the current price of bond. We have,Current price of bond = C [1 – (1 / (1+r)n ] / r +…

Q: A 5-year treasury bond with a coupon rate of 8% has a face value of $1,000. What is the semi-annual…

A: In this question we require to compute the semi-annual interest payment.

Q: Find the duration of a 6% coupon bond making annual coupon payments if it has three years until…

A: Information Provided: Coupon rate = 6% Yield to maturity = 6% Face value = $1000 Term = 3 years

Q: A bond that matures in eight years, has a coupon rate of 20% and has a maturity value of US$ 200.…

A: We require to calculate the present value of bond in this question. We can calculate the present…

Q: A 10-year bond with a $1,000 face value has a coupon rate of 8 percentpaid semiannually. If current…

A: Bonds are fixed-income assets that serve as a representation of investor loans to borrowers…

Question

Mr.Bond has a coupon rate of 5% (interest paid
annually) and maturity of 6 years. If the current price
of bond is $820.56, calculate the yield to maturity of
the bond.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

I. Definition of the Bond

VIEW

II. Solution

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4 years, has a face value of 1,000, and has a yield to maturity equal to 9.6%. One bond, Bond C, pays an annual coupon of 10%; the other bond, Bond Z, is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 9.6% over the next 4 years, what will be the price of each of the bonds at the following time periods? Fill in the following table:
Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may be called in 4 years at a call price of 1,060. The bond sells for 1,100. (Assume that the bond has just been issued.) a. What is the bonds yield to maturity? b. What is the bonds current yield? c. What is the bonds capital gain or loss yield? d. What is the bonds yield to call?
Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?