Price of a bond
Not what you're looking for?
You are contemplating buying a 4 3/4% coupon bond that makes semi-annual interest payments. The bond matures in 10 years and the yield-to-maturity currently is 4.18%. How much are you willing to pay for a face value of $1,000,000 of this bond? In addition, how much do you stand to gain or lose if YTM goes up by 0.25%?
Purchase this Solution
Solution Summary
The solution explains how to calculate the price of a bond and the gain or loss when interest rate changes.
Solution Preview
The price should be the present value of interest and principal discounted at the yield to maturity. The semi annual interest is 1,000 X 4 3/4% /2 = $23.75 and is an annuity. The principal amount is ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Operations Management
This quiz tests a student's knowledge about Operations Management
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.