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# You have an opportunity to buy a \$1,000 bond which matures in 10 years.

20. You have an opportunity to buy a \$1,000 bond which matures in 10 years. The bond pays \$30 every six months. The current market interest rate is 8%. What is the most you would be willing to pay for this bond?

21. Suppose a Swedish krona sells for \$0.1625 and a British pound sells for \$1.6523. What is the exchange rate (cross rate) of the Swedish krona to the British pound? That is, how many Swedish kronas are equal to a British pound?

22. Gray House is issuing bonds paying \$105 annually that will mature fifteen years from today. The bond is currently selling for \$980.

Calculate:
a) Coupon Rate
b) Current Yield
c) Yield To Maturity

#### Solution Preview

20. You have an opportunity to buy a \$1,000 bond which matures in 10 years. The bond pays \$30 every six months. The current market interest rate is 8%. What is the most you would be willing to pay for this bond?

where B is the issued price
C is the coupon payment
r is the discount or yield to maturity
n is the period

Then, we can replace the information into ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer managerial finance problems.

\$2.19