Question
Calculate the market value (in dollars) of the following bond using the present value formula. Maturity is exactly four years from today. The Par Value
Maturity is exactly four years from today.
The Par Value is $1,000
The Coupon Rate is 3.00%. Coupon Payments are made semi-annually.
The current YTM is 4.00%.
Referencing your answer to first question , what is the market value (in $) of the bond if;
The YTM rises from 4.00% to 4.25%.
The YTM declines from 4.00% to 3.50%
Calculate the following on a bond that has a $1,000 Par Value, matures in exactly one (1) year, has a Coupon Rate of 1.75% with Coupon Payments made annually, and current market value is $990.00;
The Current Yield
The Yield-to-Maturity (YTM)
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To calculate the market value of the bond we can use the present value formula The bond pays semiannual coupons so we need to adjust the coupon rate a...Get Instant Access to Expert-Tailored Solutions
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
9th edition
1259722619, 978-1260049190, 1260049191, 978-1259722615
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