Answer the last 2 questions please
The value of any flinancial asset is the present interest payments and its maturity value as value of the cash fnlows the asset is expected to n the equation below INT INT INT Bond's value Va INT We could use the valuation equation shown above to solve for a bond's value; however, ik is more efficient to use a financial calculator. rate, PMT as the annual coupon payment (calculated calculator, you can solve for PV, the value of the bond. Remember that the signs for PMT and numbers, so PV would be shown as a negative value. The negative sign means that received by the issuing firm (a positive flow to the firm) o t Simply enter N as years to maturity, I/YR as the going annual interest as the annual coupon interest rate times the face value of the bond), and FV as the stated maturity value. Once those inputs are entered in your financial same, so PV wll have an coooste sign. Typicany, you would enter PMT and PV a, postive n you are purchasing the bond, so the purchase price of the bond is paid out of your funds (thus the negative sign) and is Note that we calculated the bond's value assuming coupon interest payments were paid ann bond you must make the following changes: N should reflect the number of interest payment periods so multiply years to maturity times 2, LUYR should reflect the going annual interest rate by 2, and PMT should reflect the periodic interest payment so divide the annual interest payment by 2 basis. Therefore, to caiculate the value of a semiannual periodic going rate of interest so divide the For fixed-rate bonds it's important to realize that the value of the bond has a(n) ortve, if interest rates fall, then the value of the bond rrees -S). A discount bond is one that sels below its par value. This stuation occurs whewer the going rate of nterest is above the coupon rate. Over time its value wll Iacrease approaching its maturity value at maturity. A (premium bond is one that sels abeve its par value. This situaton occurs whenever the going rate of nterest is below the coupon rate. Over time its value will decrease approaching its maturity value at maturity. A par value bond is one that sells at par; the bond's coupon rate is equal to the going rats of interest. Normally, the coupon rate is set at the going market rate the day a bond is issued so it sells at par initially. relationship to the level of interest rates. If interest rates rise, then the value of the bond al uantitative Problem: Potter indust es has a bond issue outstanding with an annual coupon of 6% and a 10pear maturity. The par value of the bond is $1,000 if the gong annual interest rate s 9% what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. anti tative Problem: Potter Industries has a bond issue outstanding with a 6% cou rate with se iar nual payments of S30, and a 10-year mat annual interest rate i, 9%, what I the value of the bond? Round your answer to the nearestcent. Do not round intermediate calculations. ty. The par value of the bond is $1,000 if the going The value of any flinancial asset is the present interest payments and its maturity value as value of the cash fnlows the asset is expected to n the equation below INT INT INT Bond's value Va INT We could use the valuation equation shown above to solve for a bond's value; however, ik is more efficient to use a financial calculator. rate, PMT as the annual coupon payment (calculated calculator, you can solve for PV, the value of the bond. Remember that the signs for PMT and numbers, so PV would be shown as a negative value. The negative sign means that received by the issuing firm (a positive flow to the firm) o t Simply enter N as years to maturity, I/YR as the going annual interest as the annual coupon interest rate times the face value of the bond), and FV as the stated maturity value. Once those inputs are entered in your financial same, so PV wll have an coooste sign. Typicany, you would enter PMT and PV a, postive n you are purchasing the bond, so the purchase price of the bond is paid out of your funds (thus the negative sign) and is Note that we calculated the bond's value assuming coupon interest payments were paid ann bond you must make the following changes: N should reflect the number of interest payment periods so multiply years to maturity times 2, LUYR should reflect the going annual interest rate by 2, and PMT should reflect the periodic interest payment so divide the annual interest payment by 2 basis. Therefore, to caiculate the value of a semiannual periodic going rate of interest so divide the For fixed-rate bonds it's important to realize that the value of the bond has a(n) ortve, if interest rates fall, then the value of the bond rrees -S). A discount bond is one that sels below its par value. This stuation occurs whewer the going rate of nterest is above the coupon rate. Over time its value wll Iacrease approaching its maturity value at maturity. A (premium bond is one that sels abeve its par value. This situaton occurs whenever the going rate of nterest is below the coupon rate. Over time its value will decrease approaching its maturity value at maturity. A par value bond is one that sells at par; the bond's coupon rate is equal to the going rats of interest. Normally, the coupon rate is set at the going market rate the day a bond is issued so it sells at par initially. relationship to the level of interest rates. If interest rates rise, then the value of the bond al uantitative Problem: Potter indust es has a bond issue outstanding with an annual coupon of 6% and a 10pear maturity. The par value of the bond is $1,000 if the gong annual interest rate s 9% what is the value of the bond? Round your answer to the nearest cent. Do not round intermediate calculations. anti tative Problem: Potter Industries has a bond issue outstanding with a 6% cou rate with se iar nual payments of S30, and a 10-year mat annual interest rate i, 9%, what I the value of the bond? Round your answer to the nearestcent. Do not round intermediate calculations. ty. The par value of the bond is $1,000 if the going
