Answer these questions and show your work 1 Assume that the company that you selected for the Module 1 SLP has a bond outstanding that matures in 20 years and has a coupon rate of 6 5 The par value of the bond is $1,000 2 If the yield to maturity is 8 and the bond pays interest on an annual basis, ...

1 Current price of bond Interest amount Cumulative PV factor 8 for 20 Years Principal amount PV Fact ...

Answer these questions and show your work: 1. Assume that the company that you selected for the

Question:

Answer these questions and show your work:
1. Assume that the company that you selected for the Module 1 SLP has a bond outstanding that matures in 20 years and has a rate of 6.5%. The of the bond is $1,000.
2. If the yield to is 8% and the bond pays interest on an annual basis, what's the current price of the bond? Is the bond selling for a premium or discount? How can you tell?
3. Now, assume that the economy enters into a recession and interest rates fall. The bond's yield to is now 5%. What's the bond's new price? How does the price compare with your answer in part a? Why did the bond's value change?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...