Question 2 (1 point) Bond B matures in 23 years, has a face (par) value of...

Question

Question

business finance

Answer 1

Answer #1

For a zero coupon bond, the bond value is calculated using the following formula:

Bond Value = Face value of bond/(1+ rate of interest) ^ number of years till maturity

Given Face value = 1000

rate of interest = yield to maturity = 9.5%

time till maturity = 23 years

Thus, Bond value = 1000/(1+.095)^23 = 124.0153 = 124.02 to the nearest cent.

Do not forget to give a Thumbs up if the solution is satisfactory!

Answer 2

Similar Homework Help Questions

Question 6 (1 point) You own a zero-coupon bond of Amazon. It matures in 11 years,...

Question 6 (1 point) You own a zero-coupon bond of Amazon. It matures in 11 years, has a face (par) value of $1,000. An investor is interested in buying the bond from you it she can earn a yield to maturity of 7.50%. How much is the investor willing to pay for the bond (What is the value of the bond)? -(Express your answer to the nearest cent. i.e one thousand dollors would be entered as 1000.00). Your Answer: Answer...
Ford Motor Co. has BB rated bonds outstanding that mature in 16 years, and have a...

Ford Motor Co. has BB rated bonds outstanding that mature in 16 years, and have a 6.750% coupon rate. Coupon payments are made semi-annually. If the appropriate required rate of return for this bond is 7.25, what is the value of the bond? (Express your answer to the nearest cent. i.e one thousand dollors would be entered as 1000.00)
Calculate the value of a bond that matures in 18 years and has a $1,000 par...

Calculate the value of a bond that matures in 18 years and has a $1,000 par value. The annual coupon interest rate is 15 percent and the market's required yield to maturity on acomparable-risk bond is 8 percent. The value of the bond is $ (Round to the nearest cent.

You are considering the purchase of CJ, Inc. bonds that mature in 25 years, and have...

You are considering the purchase of CJ, Inc. bonds that mature in 25 years, and have a 8.875% coupon rate. Coupon payments are made semi-annually. If the appropriate required rate of return for this bond is 6.00, what is the value of the bond? (Express your answer to the nearest cent. i.e one thousand dollors would be entered as 1000.00.
You own a zero-coupon bond of Amazon. It matures in 4 years, has a face (par)...

You own a zero-coupon bond of Amazon. It matures in 4 years, has a face (par) value of $1,000. An investor is interested in buying the bond from you it she can earn a yield to maturity of 11.00%. How much is the investor willing to pay for the bond (What is the value of the bond)?
An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000...

An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.3%. Bond C pays a 11.5% annual coupon, while Bond Z is a zero coupon bond. a. Assuming that the yield to maturity of each bond remains at 8.3% over the next 4 years, calculate the price of the bonds at each of the following years to maturity....

(Bond valuation) A bond that matures in 19 years has a $1,000 par value. The annual...

(Bond valuation) A bond that matures in 19 years has a $1,000 par value. The annual coupon interest rate is 14 percent and the market's required yield to maturity on a comparable-risk bond is 13 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ nothing. (Round to the...
7.6 An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of...

7.6 An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 8.2%. Bond C pays a 11.5% annual coupon, while Bond Z is a zero coupon bond. Assuming that the yield to maturity of each bond remains at 8.2% over the next 4 years, calculate the price of the bonds at each of the following years to maturity....
(Bond valuation) Calculate the value of a bond that matures in 17 years and has a...

(Bond valuation) Calculate the value of a bond that matures in 17 years and has a $1,000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. The value of the bond is $___. (Round to the nearest cent.)

A 6% semiannual coupon bond matures in 6 years. The bond has a face value of...

A 6% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 6.7254%. What are the bond's price and YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answer for the bond's price to the nearest cent and for YTM to two decimal places.