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Margarita [4]
2 years ago
14

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua

l coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7.8 percent paid annually. If the yield to maturity is 8.9 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business
1 answer:
CaHeK987 [17]2 years ago
7 0

Answer:

The current price of the bond would be € 898.87

Explanation:

Hi, we need to bring to present value the coupon payments and also the face value of the coupon in order to find the price of this bond, that can be done by using the following formula.

Price=\frac{Coupon((1+Yield)^{n}-1) }{Yield(1+Yield)^{n} } +\frac{FaceValue}{(1+Yield)^{n} }

Where:

Coupon = 1,000*0.078=78

Yield = 0.089 (or 8.9%)

Face Value= 1,000

n = 20 coupon payments

So, everything should look like this.

Price=\frac{78((1+0.089)^{20}-1) }{0.089(1+0.089)^{20} } +\frac{1,000}{(1+0.089)^{20} }

Price=717.13+181.74=898.87

Therefore, the price of this bond is € 898.87

Best of luck.

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Answer: Option E

               

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It sometimes works as a guide when the organisation faces an ethical dilemma. In a healthy corporate culture every employee in the organisation is treated with respect regardless of his or her status.

Thus, from the above we can conclude that the correct option is E.

5 0
2 years ago
what is the current prices of a $1,000 par bond maturing in 12 years with a coupon rate of 14%, paid semiannually, that has a yt
Leviafan [203]

The current prices of a $1,000 par bond maturing in 12 years with a coupon rate of 14%, paid semiannually, that has a ytm of 13% is $ 130000 .

The entire return anticipated on a bond if it is kept to maturity is known as yield to maturity (YTM). Although it is expressed as an annual rate, yield to maturity is regarded as a long-term bond yield. It is, therefore, the internal rate of return (IRR) of a bond investment assuming the investor retains the bond to maturity, with all scheduled payments made and reinvested at the same pace.

Yield to maturity is comparable to current yield, which calculates how much money would be made by purchasing and keeping a bond for a year by dividing annual cash inflows from that bond by its market price. The value of a coupon paying bond is calculated by discounting the future payments (coupon and principal) by an appropriate discount rate.

The bond characteristics are summarized below:

Par Value =     $1,000

Yield        =      13% annual (13/2 =6.5% semi-annual)

Coupon   =      12% with semi-annual payment of $60

Maturity   =      1 year

The value of the bond is calculated as follows:

$1000 of 13%  = (13/1000)* 100 =130

Calculate PMT = FV*Coupon Rate

Current price = $1000*130

Price = $ 130000

Learn more about yield to maturity visit: brainly.com/question/28033398

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Answer:

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  • There are five different levels of needs according to Maslow.
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It would be Ctax rates set by private companies plsmark braliest
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