Bonds-1. Interest on a certain issue of bonds is paid annually with a coupon rat
ID: 2716685 • Letter: B
Question
Bonds-1. Interest on a certain issue of bonds is paid annually with a coupon rate of 8%. The bonds have a par value of $1,000. The yield to maturity is 9%. What is the current market piece of these bonds? The bonds will mature in 5 years.
Bonds-2. A certain bond has 12 years left to maturity. Interest is paid annually at a coupon rate of 10%. The bonds are currently selling for $850. What is their YTM?
Bonds-3. A certain bond pays a semiannual coupon rate at a 10% annual rate. The bond has a par value of $1,000. There are eight years to maturity. The yield to maturity is 9%. What is the current price of the bond?
Bonds-4. A particular corporate bond has a par value of $1,000. Coupon payments are $40 and are paid twice a year. Seven years are left on the life of the bond.The YTM is 9%. What is the price of the bond?
Bond-5. A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 5% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for?
Bond-6. A given bond has five years left to maturity. Interest is paid annually and the annual coupon rate is 9%. The par value of the bond is $1,000. The bond currently sells for $1,000. What is the yield to maturity?
Explanation / Answer
Bond 1 YTM = Interest+ FV-BV/n// FV+BV/2 .09= 80+1000-x/5//1000+x/2 .09= 2080-2x/5000+5x 450+.45x = 2080-2x 2.45x = 2080-450 X = 1630/2.45 X = 665.31 Bond 2 YTM = 100+1000-850/12//1000+850/2 YTM = 112.5/925 YTM = 12.16%