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BaLLatris [955]
3 years ago
13

A 6-year bond, 8% semiannual coupon bond sells at par ($1,000). Another bond of equal risk, maturity, and par value pays an 8% a

nnual coupon. What is the price of the annual coupon bond?
Business
2 answers:
timofeeve [1]3 years ago
7 0

Answer:

Explanation:

  • The bond has 8% coupon paid semiannually, and those bonds sell at their par value.
  • Since the bond sales at par value, Market rate (Yield) = Coupon rate =8%

<u>Second bond:</u>

  • Coupon rate = 8%
  • Par value = $1,000
  • Semiannual coupon amount = 1000 x 8%/2 = $40
  • Time to maturity = 6 years = 12 semiannual periods
  • Semiannual Yield = 8%/2 = 4%

To get price of this bond we will use PV function of excel:

= PV (rate, nper, pmt, fv, type)

= PV (4%, 12, -40, -1000, 0)

= $1053.32

  • Price of this bond = $1,053.3
weeeeeb [17]3 years ago
5 0

Answer:

$936.65

Explanation:

we firstly need to calculate the yield to maturity in order to calculate the Price of the bond  Since the semiannual bond has the same risk as the annaul bond we will calculate the YTM of the semiannual bond

YTM=C+(F-P)/F+P/2

       =80+(1000-1000)/1000+1000/6*2

        =0.0738/7.38%

 Then we calculate the value of the bond

P= C/(1+YTM)+F/(1+YTM)

  =80/(1+0.0738)^6+1000/(1+1.0738)^6

  =69.38+867.27

   =$936.65

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Step-by-step explanation:

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What is meant by standards of justice haven't always been met?
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Answer;

We have no achieved "equal justice for all" examples. women, minorities such as blacks, gays

Explanation;

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4 0
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Mochel Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has e
oee [108]

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$16,100 favorable

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The same should be considered and relevant

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You are considering opening a donut restaurant aimed primarily at the breakfast market. You plan to sell donuts, coffee, and oth
stich3 [128]

Answer:

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Explanation:

<u>First, we need to determine the sale proportion of each product:</u>

Other items= 2/5= 0.4

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<u>Now, we can calculate the break-even point in units for the company as a whole:</u>

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Break-even point (units)= 100,000 / (0.5*0.2 + 0.5*0.4 + 1*0.4)

Break-even point (units)= 100,000 / 0.7

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<u />

Donuts= 0.2*142,857

Donuts= 28,571

3 0
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lana66690 [7]

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