Question
Please show formulas P616 Bond valuation: Annual interest Calculate the value of each of the bonds shown in the following table, all of which pay
Please show formulas
P616 Bond valuation: Annual interest Calculate the value of each of the bonds shown in the following table, all of which pay interest annually.
Bond | Par value | Coupon interest rate | Years to maturity | Required return |
---|---|---|---|---|
A | $1,000 | 14% | 20 | 12% |
B | 1,000 | 8 | 16 | 8 |
C | 100 | 10 | 8 | 13 |
D | 500 | 16 | 13 | 18 |
E | 1,000 | 12 | 10 | 10 |
Problem P6-16 |
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A. |
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Settlement |
| (Think of Settlement as the beginning of the duration of the bond) |
Maturity |
| (Think of Maturity as the end of the duration of the bond) |
Rate |
| (Coupon Rate) |
YTM |
| (Yield to Maturity or Required Rate fo Return) |
Redemption |
| (Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.) |
Frequency |
| (Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1) |
Basis |
| (Always leave it blank) |
Bond Price: |
| (The answer. But you need to multiply it by 10 to get the actual bond price.) |
Multiply by 10 |
| (Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price) |
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B. |
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|
Settlement |
| (Think of Settlement as the beginning of the duration of the bond) |
Maturity |
| (Think of Maturity as the end of the duration of the bond) |
Rate |
| (Coupon Rate) |
YTM |
| (Yield to Maturity or Required Rate fo Return) |
Redemption |
| (Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.) |
Frequency |
| (Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1) |
Basis |
| (Always leave it blank) |
Bond Price: |
| (The answer. But you need to multiply it by 10 to get the actual bond price.) |
Multiply by 10 |
| (Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price) |
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|
C. |
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|
Settlement |
| (Think of Settlement as the beginning of the duration of the bond) |
Maturity |
| (Think of Maturity as the end of the duration of the bond) |
Rate |
| (Coupon Rate) |
YTM |
| (Yield to Maturity or Required Rate fo Return) |
Redemption |
| (Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.) |
Frequency |
| (Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1) |
Basis |
| (Always leave it blank) |
Bond Price: |
| (Note: You will not multiply by 10 since the par value is $100) |
Multiply by 10 |
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D. |
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|
Settlement |
| (Think of Settlement as the beginning of the duration of the bond) |
Maturity |
| (Think of Maturity as the end of the duration of the bond) |
Rate |
| (Coupon Rate) |
YTM |
| (Yield to Maturity or Required Rate fo Return) |
Redemption |
| (Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.) |
Frequency |
| (Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1) |
Basis |
| (Always leave it blank) |
Bond Price: |
| (The answer. But you need to multiply it by 10 to get the actual bond price.) |
Multiply by 10 |
| (Note: You will only multiply by 5 since the par value is $500) |
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E. |
|
|
Settlement |
| (Think of Settlement as the beginning of the duration of the bond) |
Maturity |
| (Think of Maturity as the end of the duration of the bond) |
Rate |
| (Coupon Rate) |
YTM |
| (Yield to Maturity or Required Rate fo Return) |
Redemption |
| (Bonds Face Value, Par Value, or Fair Price; Note that is is $100, not $1,000. You make the adjustments by multiplying the answer by 10.) |
Frequency |
| (Coupon payments are semiannul, so you put in a 2. If they are annual, then you input a 1) |
Basis |
| (Always leave it blank) |
Bond Price: |
| (The answer. But you need to multiply it by 10 to get the actual bond price.) |
Multiply by 10 |
| (Microsoft gives the bond price in 2 digits like in cell B111. You need to multiply it by 10 to get the actual bond price) |
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