What is the market price of a zero-coupon bond (that is, a bond that will not pay any couponpayments) that will mature in 16 years and has the face value of $1,000? Assume the yield tomaturity is 3.6%, and that it will compound semiannually.O $565.03O $612.24O $567.86O $653.12Question 15A bond has $1,000 face value, coupon rate of 6.2%, and yield to maturity (YTM) of 5.2%. It willmature in 15 years and the interest rate will compound semiannually. What is this bond's currentyield?O 6.13%O 5.62%O 5.38%O 5.52%

Face value of zero coupon bond (F) = $1000 n = 16 years = 32 semiannual periods r = 3.6% per annum =…

What is the market price of a zero-coupon bond (that is, a bond that will not pay any coupon payments) that will mature in 16 years and has the face value of $1,000? Assume the yield to maturity is 3.6%, and that it will compound semiannually. O $565.03 O S612.24 O $567.86 O $653.12

What is the market price of a zero-coupon bond (that is, a bond that will not pay any coupon payments) that will mature in 16 years and has the face value of $1,000? Assume the yield to maturity is 3.6%, and that it will compound semiannually. O $565.03 O S612.24 O $567.86 O $653.12

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 14P: Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has...

See similar textbooks

Related questions

Q: Suppose a ten-year, $1,000 bond with an 8.1% coupon rate and semiannual coupons is trading for…

A: As per company guidelines expert can answer only question at a time. Ask remaining questions…

Q: a. What is the duration of a two-year bond that pays an annual coupon of 11.5 percent and has a…

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

Q: Calculate the price of a zero-coupon bond that matures in 10 years if the market interest rate is 6…

A: Formula:

Q: Suppose a ten-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading for…

A: Yield to maturity is the return that is obtained on holding the bond till maturity.

Q: A coupon bond pays this amount every 6 months; for the number of payments/year; 30.00 2 The bond…

A: Please find the excel formula and answers below. As, the required return decreases, price of the…

Q: Suppose a ten-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading for…

A: Par value = $1000 Coupon rate = 8.5% Semi annual coupon amount = 1000*0.085/2 = $42.50 Years to…

Q: What is the current price of a 9%, GHS1,000 annual coupon bond that has eighteen years to maturity…

A: Given data: YTM = 9.631% Years to maturity = 18 years Coupon rate = 9% Par value = GHS 1000

Q: A 7-year zero-coupon bond has a face value of $1,00o. If its YTM changes from 3.9% to 4.7%, what is…

A: Bond valuation is the method of finding the fair value of the bond. Present value means the…

Q: What is the current yield on a zero coupon bond with a remaining life of 16 years, a yield to…

A: Maturity period (m) = 16 years Yield to maturity (YTM) = 0.106 or 10.6% Face value or maturity value…

Q: You buy a bond for $958 that has a coupon rate of 6.20% and a maturity of 5-years. A year later, the…

A: Bond Yield is one of the most important part in valuating the bond. Bonds are compared on the basis…

Q: A zero-coupon bond has a face value of $500,000 and matures in 4 years. If the bond is currently…

A: Face value opf bond is $500,000 Maturity period is 4 years Current selling price is $381,447.61 To…

Q: You find a zero coupon bond with a par value of $10,000 and 24 years to maturity. If the yield to…

A: Par value of bond (F) =$ 10000 Maturity period = 24 Years Yield = 4.2% Compounding = semiannual…

Q: Assume the zero-coupon yields on default-free securities are as summarized in the following table:…

A: Bond Bonds are debts instruments that are issued by entities to raise funds and meet their capital…

Q: A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 7.9%, and…

A: Face value of bond is $1,000 Time period is 10 years Coupon rate is 7.9% Coupon frequency is annual…

Q: You buy a(n) 7.4% coupon, 5-year maturity bond for $976. A year later, the bond price is $1,136.…

A: Borrowings are the liability of the company which is used to finance the requirement of the funds.…

Q: Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon…

A: Maximum Price of Bond = Present Value of future cash flows of bond (discounted at required yield)…

Q: What is the yield to maturity of a one-year, risk-free, zero-coupon bond with a $5,000 face value…

A: Given: Face value = $5,000 Present value = $4,550 Year = 1

Q: suppose a ten-year, 1,000 bond with an 8.8% coupon rate semiannual coupons is trading for $1,035.89…

A: Time Period (Years) (NPER) 10 Face Value (FV) $ 1,000.00 Coupon Rate (PMT) 8.80% Current…

Q: payment? P4-23. What is the price of a zero-coupon bond that has a par value of $1,000? The bond…

A: Requirement : P4-23 Par Value = 1000 Time Period = 30 years YTM = 4.5% Price of Bond using PV…

Q: A corporate bond is currently quoted at a price of $1197.93 and carries a 10 percent annual coupon…

A: Bonds are debt instruments issued by companies. Bond pays periodic fixed coupon payments.

Q: Suppose a ten-year, $1,000 bond with an 8.1% coupon rate and semiannual coupons is trading for…

A: A bond is defined as the financial instrument that is used to raise capital from the market at a…

Q: Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon…

A: Price of the bond is calculated as the sum of the present value of all the coupons and maturity…

Q: What is the current price of a P1,000 par value bond maturing in 12 years with a coupon rate of 14%,…

A: Par value of bond (FV) = P 1,000 Coupon rate = 14% Semi annual coupon amount (C) = 1000*0.14/2 = $…

Q: Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of R1 000 is currently…

A: When the bond is called, the call price is paid to the bondholder and the yield to call is based on…

Q: Suppose a ten-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading for…

A: Here,

Q: CCC Co issues a bond today that will pay a coupon of 8%, twice a year. The yield to maturity for…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: What's the market price for a $100,000 Par, 3.25% Coupon bond with 18 years to maturity that is…

A: Given, Par value of bond $100,000 Coupon rate is 3.25% term to maturity is 18 years YTM 1.79%

Q: You buy a bond for $964 that has a coupon rate of 6.60% and a maturity of 7-years. A year later, the…

A: Given:

Q: The current market price of a 10-year zero- coupon bond is $1,234.567. The face value of the bond is…

A: A zero coupon bond is a bond which is issued at deep discount and redeemed at face value. There is…

Q: A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon,…

A: Yield to maturity (YTM) is the return expected when the bond is held till its maturity period Yield…

Q: 15

A: Given that;Face value of the bond is $5000Present value of the bond is $4304.48Yield to maturity is…

Q: Suppose a ten-year, $1,000 bond with an 8.5% coupon rate and semiannual coupons is trading for…

A: Bond price is the sum of present value of all coupons and present value of face value at maturity.…

Q: Prices of zero-coupon bonds show: year forward rate 1 6% 2 8% 3 9% investors also may purchase a…

A: Given:

Q: What is the price of a 3 year , 8.2% coupon rate ,$1000 face value bond that pays interest quarterly…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: Suppose a ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for…

A: A bond is a debt instrument that is issued by the organization to raise the funds from the investor…

Q: Consider a bond that has a current value of $1,081.11, a face value of $1,000.00, a coupon rate of…

A: Current Value of Bond = 1081.11 Face Value of Bond = 1000 Coupon = Coupon Rate * Face Value of Bond…

Q: How does the equation for valuing a bond change if semiannual payments are made? Find the value of a…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: What is the dollar price of a zero coupon bond with 13 years to maturity, semiannual compounding,…

A: Bonds are priced to yield a certain return to investors. A bond that sells at a premium (where the…

Q: A. What is the duration of a two-year bond that pays an annual coupon of 10% and whose current yield…

A: Part a: Coupon rate = 10% Yield to maturity = 14% Time period = 2 years Face value = $1000

Q: A zero-coupon bond has face value of $1,000 and time to maturity of 2.9 years. If it is currently…

A: Yield to maturity for Zero-Coupon bond = (Face value /Current trade price)1/years to mature -1 Face…

Q: A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until…

A: Bonds are defined as financial instruments used by companies to raise additional funds from the…

Q: A zero-coupon bond has a par value of $1,000, costs $588.11 today, and matures in 16 years. Assume…

A: In the above question we need to find out the yield to maturity on a zero coupon bond. Other details…

Q: What must be the price of a $5,000 bond with a 6.5% coupon rate, semiannual coupons, and five years…

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

Q: Suppose a ten-year, $1,000 bond with an 8.8% coupon rate and semiannual coupons is trading for…

A: Time period = 10 year Coupon rate = 8.8% Selling price = $1,034.64

Q: What is the expected rate of return on a bond that pays a coupon rate of 9%, has a par value of…

A: Facts of the question : Coupon rate = 9% Interest amount = (P1000*9%) = P90 Par value of Bond =…

Question

What is the market price of a zero-coupon bond (that is, a bond that will not pay any coupon
payments) that will mature in 16 years and has the face value of $1,000? Assume the yield to
maturity is 3.6%, and that it will compound semiannually.
O $565.03
O $612.24
O $567.86
O $653.12
Question 15
A bond has $1,000 face value, coupon rate of 6.2%, and yield to maturity (YTM) of 5.2%. It will
mature in 15 years and the interest rate will compound semiannually. What is this bond's current
yield?
O 6.13%
O 5.62%
O 5.38%
O 5.52%

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

Step 1

VIEW

Step 2

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

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?
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?
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
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:
What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)