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Bond #2: 30 Year MaturityBond #2 is a 30 year, 6.25% semiannual coupon bond. It has a par/face value of $3,000 and may be called
Bond #2: 30 Year MaturityBond #2 is a 30 year, 6.25% semiannual coupon bond. It has a par/face value of $3,000 and may be called in 10 years at a call price of $7,500. The bond sells for $3,000. Complete the information in the table below.
Bond InformationFormulasYears to maturity:30How long it is forPeriods per year:2Number of times it pays interestPeriods to maturity: number of years x number of payment periods 25 years x 2 periodCoupon rate:6.25%Your interest ratePar/face value:$3,000Face valueaka the value of the bondPeriodic payment:Par value x (coupon rate / periods per year)Current price$3,000Sale priceCall price:$7,500Amount paid should the bond be called earlyaka the person using the bond money pays their loan off earlyYears till callable:10When they can call it in, meaning pay you the $6000 for itPeriods till callable:number of years x number of periodsBased on the bond information above, calculate the following information for Bond #1:Hints:FormulasPeriodic Yield to Maturity =Try using rate function of Excel and enter periods to maturity, periodic payment, negative current price, par value; this is the yield for each period you own the bondusing rate function, enter periods to maturity, periodic payment, negative current price, par valueAnnual Yield to Maturity =Use your periodic yield to maturity and the periods per year; this is your yield for each yearPeriodic yield to maturity x periods per yearAnnual Coupon Rate =This is a dollar value, not a percent; the payment amount you can expect each yearPeriodic payment x periods per yearCurrent yield =Ann. Coupon Rate / Current Price; yield based on current conditionsAnn. Coupon / Current PricePeriodic Yield to Call = Try using the RATE function of ExcelRate function using: periods to call, periodic payment, negative current price, call priceAnnual Yield to Call = Use your periodic yield to call x periods per year; this is your yield for each year until the bond is callable
Bond #2: 30 Year Maturity | |||||||||||
Bond #2 is a 30 year, 6.25% semiannual coupon bond. It has a par/face value of $3,000 and may be called in 10 years at a call price of $7,500. The bond sells for $3,000. Complete the information in the table below. | |||||||||||
Bond Information | Formulas | ||||||||||
Years to maturity: | 30 | How long it is for | |||||||||
Periods per year: | 2 | Number of times it pays interest | |||||||||
Periods to maturity: | number of years x number of payment periods 25 years x 2 period | ||||||||||
Coupon rate: | 6.25% | Your interest rate | |||||||||
Par/face value: | $3,000 | Face valueaka the value of the bond | |||||||||
Periodic payment: | Par value x (coupon rate / periods per year) | ||||||||||
Current price | $3,000 | Sale price | |||||||||
Call price: | $7,500 | Amount paid should the bond be called earlyaka the person using the bond money pays their loan off early | |||||||||
Years till callable: | 10 | When they can call it in, meaning pay you the $6000 for it | |||||||||
Periods till callable: | number of years x number of periods | ||||||||||
Based on the bond information above, calculate the following information for Bond #1: | |||||||||||
Hints: | Formulas | ||||||||||
Periodic Yield to Maturity = | Try using rate function of Excel and enter periods to maturity, periodic payment, negative current price, par value; this is the yield for each period you own the bond | using rate function, enter periods to maturity, periodic payment, negative current price, par value | |||||||||
Annual Yield to Maturity = | Use your periodic yield to maturity and the periods per year; this is your yield for each year | Periodic yield to maturity x periods per year | |||||||||
Annual Coupon Rate = | This is a dollar value, not a percent; the payment amount you can expect each year | Periodic payment x periods per year | |||||||||
Current yield = | Ann. Coupon Rate / Current Price; yield based on current conditions | Ann. Coupon / Current Price | |||||||||
Periodic Yield to Call = | Try using the RATE function of Excel | Rate function using: periods to call, periodic payment, negative current price, call price | |||||||||
Annual Yield to Call = | Use your periodic yield to call x periods per year; this is your yield for each year until the bond is callable | Periodic yield to call x periods per year | |||||||||
Bond .10 year Maturity
Bond #l is a 10 year, 4.5% semiannual coupon bond. It has a par/face value or $5,000 and may be called in 6 years at a call price of
sa500 The bond sels for 55 250 Complete the intormation in the table below.
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