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Question 1: Using the May 2097 Ford Motor 7.7% bond, assuming a $1,000 semi-annual coupon bond, find the bonds yield to maturity if the bond
Question 1: Using the May 2097 Ford Motor 7.7% bond, assuming a $1,000 semi-annual coupon
bond, find the bonds yield to maturity if the bond is selling for the following prices:
https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C54017&symbol=F.GQ
(a) 900?
(b) 1,000?
(c) 1,100?
Question 2: A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a coupon rate of 6.25%. It is was a 30 year bond when issued and it has 11 years remaining to maturity. If it currently has a yield to maturity of 5.25%.
(a) What interest payments do bondholders receive each year? interest payment: 6.25%*$1000=0.0625*1000=$62.5
(b) What is the current bond price?
bond price: pay an annual coupon rate of 6.25%,30 year bond and it has 11 year remaining to maturity. YTM=5.25%
Bond price:C*[(1-(1/(1+r)^t)/r]+F/((1+r)^t)
C=coupon =62.5, r=yield to maturity=YTM,t=time of period, F=face value
thus, 62.5*[(1-(1/(1+0.0525)^11)/0.0525]+1000/((1+0.0525)^11)=(62.5*8.198423)+$569.58=512.40+$569.58=1081.98 (approximate is $1082)
(c) What is the bond price if the yield to maturity rises to 7.25%?
C*[(1-(1/(1+r)^t)/r]+F/((1+r)^t)
62.5*[(1-(1/(1+0.0725)^11)/0.0725]+1000/((1+0.0725)^11)= ($ 62.50 * 7.4062 )+ ($ 1,000 * 0.4631) = $ 925.99(approximate is $926)
(d) What is the Duration of the bond (with YTM = 5.25)?
Could you show question 1 details process with no excel, and also could you show the question 2 part (d) details process with no excel.
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