Explore BrainMass

# Calculation Bond Value

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of \$1,000, and a coupon rate of 7.2% (annual payments). The yield to maturity on this bond when it was issued was 6.1%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?
After the first coupon payment, the price of the bond will be \$___. (Round to the nearest cent.)

Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a 1,000 par, 4% coupon bond maturing in one and a half years (the next coupon is exactly six months from now)?
The price of this bond is \$____. (Round to the nearest cent.)

Â© BrainMass Inc. brainmass.com December 24, 2021, 11:55 pm ad1c9bdddf

#### Solution Preview

Response is attached.

Bonds
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of \$1,000, and a coupon rate of 7.2% (annual payments). The yield to maturity on this bond when it was issued was 6.1%. Assuming the yield to maturity remains constant, what is the price of the bond immediately ...

#### Solution Summary

Performing multiple calculations to determine the Present Value of a bond based on the coupon rate, maturity rate, bond's face value, interest rate period and number of compounding periods.

\$2.49