Question
1. The bond has a face (or par or principal) amount of $10,000. The bond was issued on January 1, 2010 and matures on December
1. The bond has a face (or par or principal) amount of $10,000. The bond was issued on January 1, 2010 and matures on December 31, 2013 (thats FOUR years from start to maturity). The bond pays interest semi-annually (set your P/Y key = 2). The bonds pay interest at a face (or coupon) rate of 5%. Thus, the semi-annual interest payments are $250. What is the price (or market value) of this bond if market rates have risen to 7%? In your calculations, round only your answer (the market value of the bond) to the nearest dollar. Do not round any other amount in the problem.
A. $1,718
B. $9,313 | ||
C. $9,633 | ||
D. $10,000 |
E. $11,978 | ||
2. The bond has a face (or par or principal) amount of $10,000. The bond was issued on January 1, 2010 and matures on December 31, 2013 (thats FOUR years from start to maturity). The bond pays interest semi-annually (your P/Y key = 2). The bonds pay interest at a face (or coupon) rate of 5%. Thus, the semi-annual interest payments are $250. What is the price (or market value) of this bond if market rates have fallen to 3%? In your calculations, round only your answer (the market value of the bond) to the nearest dollar. Do not round any other amount in the problem.
A. $1,871
B. $9,283 | ||
C. $10,000 | ||
D. $10,749 E. $11,987 |
3. Use your BA II Plus calculator to answer the following. A bond has a face (or par or principal) amount of $50,000. The bond was issued on January 1, 2010 and matures on December 31, 2014 (thats FIVE years from start to maturity). The bond pays interest semi-annually (your P/Y key = 2). The bond pays interest at a face (or coupon) rate of 8%. What is the price (or market value) of this bond if market rates have fallen to 6%? In your calculations, round only your answer (the market value of the bond) to the nearest dollar. Do not round any other amount in the problem.
A. $17,060
B. | $45,945 | |
C. | $50,000 | |
D. | $52,290 | |
E. | $54,265 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started