Issue date: 1/1/21 Today's date: 1/1/25 Bond maturity date: 12/31/30 Bond principal amount: $1,000.00; to be repaid in full at maturity Coupon rate: 9%; pays interest annually on the last day of the calendar year Market rate today for similar bonds: 7%
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- Give typing answer with explanation and conclusion 1- Imagine the bond above displayed the following details: $10,000 Matures: January 31, 2030; Interest of $200 payable June 30 and December 31 of each year. Can you calculate the annual effective interest rate for this bond? a)2% b)4% c)6% d)One cannot tell.You have the following information regarding an annual bond. What is the modified duration of this bond? Payment $40 YTM 6.5% Maturity (in years) 19 Par value $1,000Assume that a bond makes 30 equal annual payments of \$1,000$1,000 starting one year from today. (This security is sometimes referred to as an amortizing bond.) If the discount rate is 3.5\%3.5% per annum, what is the current price of the bond?
- Calculate the selling price of the following 5-year bond issue: e. # bonds Bond rate of interest Interest payable Market rate of interest Bond maturity (face) value 600 5.8% semi-annually 6.0% $1,000Use the following tables to calculate the present value of a $672,000, 6%, 6-year bond that pays $40,320 ($672,000 x 6%) interest annually, if the market rate of interest is 7%. Present Value of $1 at Compound Interest Periods 6% 7% 1 0.94340 0.93458 0.90909 2 0.89000 0.87344 0.82645 3 0.83962 0.81630 0.75131 4 0.79209 0.76290 0.68301 5 0.74726 0.71299 0.62092 6 0.70496 0.66634 0.56447 7 0.66506 0.62275 0.51316 8 0.62741 0.58201 0.46651 9 0.59190 0.54393 0.42410 0.55839 0.50835 0.38554 10 Present Value of Annuity of $1 at Compound Interest Periods 1 2 3 4 5 6 7 8 9 5% 10 0.95238 0.90703 0.86384 0.82270 0.78353 0.74622 0.71068 0.67684 0.64461 0.61391 5% 0.95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 6% 0.94340 1.83339 2.67301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 7% 0.93458 1.80802 2.62432 10% 10% 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 5.75902 7.02358 6.14457 Round your intermediate calculations and final answer to the nearest…Bond A has the following terms: • Coupon rate of interest (paid annually): 12 percent • Principal: $1,000 • Term to maturity: Ten years Bond B has the following terms: • Coupon rate of interest (paid annually): 6 percent • Principal: $1,000 • Term to maturity: Ten years a. What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ b. What will be the price of each bond if, after five years have elapsed, interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ c. What will be the price of each bond if, after ten years have elapsed, interest rate is 10 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $
- A bond has the following features: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: 12 years What will the holder receive when the bond matures? Principal or All coupon payments? If the current rate of interest on comparable debt is 9 percent, what should be the price of this bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Would you expect the firm to call this bond? Why? -Yes or No, since the bond is selling for a discount or premium? If the bond has a sinking fund that requires the firm to set aside annually with a trustee sufficient funds to retire the entire issue at maturity, how much must the firm remit each year for twelve years if the funds earn 9 percent annually and there is $120 million outstanding? Use Appendix C to answer the question. Round your answer to the nearest dollar. $A bond promises to pay $150 in one year. What is the interests rate on the bond if its price today is $65,$75 and $85?According to the expectations theory of the term structure of interest, if the 1-year bond rate today is 6% p.a. and the 2-year bond rate today is 7% p.a., what is the 1-year bond rate next year? A. 6% B. 6.75% C. 7.5% D. 8%
- Use the following tables to calculate the present value of a $791,000, 5%, 6-year bond that pays $39,550 ($791,000 × 5%) interest annually, if the market rate of interest is 6%. Present Value of $1 at Compound Interest Periods 5% 6% 7% 10% 1 0.95238 0.94340 0.93458 0.90909 2 0.90703 0.89000 0.87344 0.82645 3 0.86384 0.83962 0.81630 0.75131 4 0.82270 0.79209 0.76290 0.68301 5 0.78353 0.74726 0.71299 0.62092 6 0.74622 0.70496 0.66634 0.56447 7 0.71068 0.66506 0.62275 0.51316 8 0.67684 0.62741 0.58201 0.46651 9 0.64461 0.59190 0.54393 0.42410 10 0.61391 0.55839 0.50835 0.38554 Present Value of Annuity of $1 at Compound Interest Periods 5% 6% 7% 10% 1 0.95238 0.94340 0.93458 0.90909 2 1.85941 1.83339 1.80802 1.73554 3 2.72325 2.67301 2.62432 2.48685 4 3.54595 3.46511 3.38721 3.16987 5…Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $750, calculate the interest rate that the bond would yield to a bond buyer. Show all work.Given: Bond Face or Par Value: $1,000 Current Market Price: $995.34 Time to Maturity: 11 years Coupon: $30 per year, paid semiannually Bond is callable in five years at $1,030 a. What is the bond's coupon rate? b. What is the bond's current yield? c. What is the bond's yield to maturity? (Use financial calculator to solve, list all keystrokes)
