Purchase Solution

Value of a Bond with Coupon Payment

Not what you're looking for?

Ask Custom Question

Consider a bond with a face value of $1000. The coupon payment is made semiannually and the yield on the bond is 12% (effective annual yield). How much would you pay for the bond if:
a. The coupon rate is 8% and the remaining time to maturity is 20 years?
b. The coupon rate is 10% and the remaining time to maturity is 15 years?

Purchase this Solution
Solution Summary

The solution attaches a Word file with a two-part bond value question answered

Solution Preview

Please see the attached file.

Consider a bond with a face value of $1000. The coupon payment is made semiannually and the yield on the bond is 12% (effective annual yield). How much would you pay for the bond if:
a. The coupon rate is 8% and the remaining time to maturity is 20 years?
b. The coupon rate is 10% and the ...

Purchase this Solution
Free BrainMass Quizzes
SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

View More Free Quizzes
Related BrainMass Solutions

  • Price of a Bond

    We first calculate the price of the bond with the first coupon payment made and add the value of the first coupon Calculating Value of bond To calculate the value of the bond we need to calculate / read from tables the values of

  • Bond values and interest rates

    220529 Bonds: How would bond value change if interest rates fall? Suppose that 5-year government bonds are selling on a yield of 4 percent. Value a 5-year bond with a 6 percent coupon.

  • Calculation Bond Value

    618959 Calculation Bond Value 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).

  • Bond's value and interest rates

    66256 How does a bond's value change with the interest rate? How does a bonds value change with the interest rate? How does a bonds value change with the interest rate?

  • Choosing Between Two Financing Options

    Issuance costs are $1 million, the bond has a 9% coupon paid semiannually, and the bond has a 20-year life. (2) A $50 million private placement with a large pension fund.

  • Calculate: Bond Yields and Pricing

    A 6-year Circular File bond pays interest of $80 annually and sells for $950. What are its coupon rate current yield and yield to maturity? 1. A bond with face value $1,000 has a current yield of 7 percent and a coupon rate of 8 percent.

  • Current Value of a Bond

    112794 Current Value of a Bond What is the current value of a bond with a coupon rate of 5%, 10 years to maturity, $1000 par value and YTM of 6%?

  • Price of bond

    The ABC Company bond has a 7 percent annual coupon with 7 years remaining while the XYZ Company bond has a 10 percent annual coupon with 5 years remaining.

  • Calculating Fair Value and Maturity of a Bond

    Let us assume face value of each bond=$1000 For bond with one year maturity, investor will get face value (i.e. $1000) only as coupon payment is already made.

View More Related Solutions