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Interest 100 0.10 Par Value Bond 1000: Yield-To-Maturity

The document contains example bond pricing questions and their solutions. A $1,000 par value bond paying $75.80 in annual interest has a 7.58% coupon rate. A 6% coupon, 14-year annual bond priced at $994 has a current yield of 6.04%. A $1,000 par value, 3.5% coupon semi-annual bond with 22 years to maturity and a 3% yield has a price of $1,035.21.

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Ahmed Mahmoud
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42 views

Interest 100 0.10 Par Value Bond 1000: Yield-To-Maturity

The document contains example bond pricing questions and their solutions. A $1,000 par value bond paying $75.80 in annual interest has a 7.58% coupon rate. A 6% coupon, 14-year annual bond priced at $994 has a current yield of 6.04%. A $1,000 par value, 3.5% coupon semi-annual bond with 22 years to maturity and a 3% yield has a price of $1,035.21.

Uploaded by

Ahmed Mahmoud
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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A $1,000 par value bond that pays interest annually just paid $100 in interest.

What is the co

interest 100 0.10


par value bond 1000

An 6% coupon, 14-year annual bond is priced at $994. What is the current yield for this bond

coupon

bond price

What is the price of a $1,000 par value semi-annual coupon bond with 24 years to maturity a
FV 1000 PMT
N 24 I/Y
rate 4.40% N
yield-to-maturity 8.10% PV

What is the price of a $1,000 par value, 15-year, annual coupon bond with a 6.20% coupon bond rate and a yield t

You bought a 25-year, 4.3% semiannual coupon bond today and the current market rate of r

A 9.20% annual coupon, 9 year bond has a yield to maturity of 3.3%. Assuming the par valu

a)
b)
c)
0 in interest. What is the coupon rate? (Please show your answer up to 4 decimal places.)

e current yield for this bond? (Please show your answer up to four decimal places.)

with 24 years to maturity and a coupon rate of 4.4% and a yield-to-maturity of 3.9%?

% coupon bond rate and a yield to maturity of 8.10%?

the current market rate of return is 3.6%. The bond is callable in 3 years with a $93 call premium. Wh

3%. Assuming the par value is $1,000 and the YTM does not change over the next year, what will the
decimal places.)

l places.)

ty of 3.9%?

ith a $93 call premium. What price did you pay for your bond?

the next year, what will the price of the bond be today? What will the bond price be in one year? Wha
d price be in one year? What is the capital gains yield for this bond?
EXAMPLE QUESTIONS and SOLUTIONS

A $1,000 par value bond that pays interest annually just paid $75.8 in interest. What is the c

Obtained using 75.8/1,000.

An 6% coupon, 14-year annual bond is priced at $994. What is the current yield for this bond

Obtained using .06(1,000)/994 = 60/994 = 0.0604.

What is the price of a $1,000 par value semi-annual bond with 22 years to maturity and a co

Obtained using FV = 1,000; PMT = 0.035(1,000)/2 = 17.5; I/Y = 3/2 = 1.5; N = 22(2) = 44; and CPT

What is the price of a $1,000 par 15-year, annual bond with a 8% coupon rate and a yield to

Obtained using FV = 1,000; N = 15; PMT = 0.08(1,000) = 80; I/Y = 3.5; and CPT PV.

You bought a 21-year, 5.3% semiannual coupon bond today and the current market rate of r

Obtained using FV = 1,093; PMT = 0.053(1,000)/2 = 26.5; I/Y = 5/2 = 2.5; N = 4(2) = 8; and CPT P

A 9.1% coupon, 24-year annual bond has a yield to maturity of 8.1%. Assuming the par valu

Obtained using the following inputs:


FV = 1,000; PMT = 0.091(1,000)  =91; N = 24; I/Y = 8.1; CPT PV = 1104.42
FV = 1,000; PMT = 91; N = 23; I/Y = 8.1; CPT PV = 1,102.87
CGY = (1,102.87 - 1,104.42)/1,104.42 = -0.0014
CY = 91/1,104.42 = .0824
YTM = CY + CGY = .0824 + (-0.0014) = 0.081.
8 in interest. What is the coupon rate? (Please show your answer up to 4 decimal places.)

e current yield for this bond? (Please show your answer up to four decimal places.)

years to maturity and a coupon rate of 3.5% and a yield-to-maturity of 3%?

1.5; N = 22(2) = 44; and CPT PV.

coupon rate and a yield to maturity of 3.5%?

5; and CPT PV.

the current market rate of return is 5%. The bond is callable in four years with a $1,093 call premium.

2.5; N = 4(2) = 8; and CPT PV.

1%. Assuming the par value is $1,000 and the YTM does not change over the next year, what will the
decimal places.)

l places.)

with a $1,093 call premium. What price did you pay for your bond?

he next year, what will the price of the bond be today? What will the bond price be in one year? Wha
price be in one year? What is the capital gains yield for this bond?

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