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GaryK [48]
3 years ago
8

Yan Yan Corp. has a $10,000 par value bond outstanding with a coupon rate of 4.8 percent paid semiannually and 22 years to matur

ity. The yield to maturity on this bond is 4.2 percent. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Shalnov [3]3 years ago
4 0

Answer:

$10,856

Explanation:

Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond.

According to given data

Face value of the bond is $10,000

Coupon payment = C = $10,000 x 4.8% = $480 annually = $240 semiannually

Number of periods = n = 22 years x 2 = 44 period

YTM =  4.2% annually = 2.1% semiannually

Price of the bond is calculated by following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond = $240 x [ ( 1 - ( 1 + 2.1% )^-44 ) / 2.1% ] + [ $10,000 / ( 1 + 2.1% )^44 ]

Price of the Bond = $6,848.64 + $4007.4 = $10,856.04

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Answer:

13.61 %

Explanation:

We have these information to answer the question

Risk free rate = 5.25

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= 5.25 + [0.88(14.75-4.62)]

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Thank you!

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Maynard Inc. preferred stock pays an annual dividend of $7 per share. Which of the following statements is true for an investor
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If demand for farmer​ john's maple syrup is​ inelastic, then when farmer john raises the price of maple​ syrup, his total revenu
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Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of ho
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The second option which 5 years to maturity exhibited a lower price of

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a.

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PV=$1000/(1+13.80%)^4

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b.

PV=FV/(1+r)^n

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