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16. A bond with 5 years to maturity is selling for $1,000 and has a yield...

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Finance

16. A bond with 5 years to maturity is selling for $1,000 andhas a yield to maturity of 4.50%. If this bond pays its couponpayments semi-annually and par value is $1,000, what is the bond'sannual coupon rate?

A. 4.45%

B. 4.50%
C. 4.89%
D. 4.95%
E. 5.12%

19. Acme Inc. just issued a bond with a $1,000 face value and acoupon rate of 7%. If the bond has a life of 30 years, payssemi-annual coupons, and the yield to maturity is 9%, what will theAcme, Inc. bond sell for?
A. $434.95
B. $790.45
C. $793.62
D. $794.53
E. $894.56


20. What is the price of a five-year bond with a $1,000 face valueand a 5.0% annual coupon rate that currently yields 7.0%? The bondpays annual coupons.
A. $784
B. $897
C. $918
D. $1,000
E. $1,087

Answer & Explanation Solved by verified expert
4.1 Ratings (444 Votes)

16

                  K = Nx2
Bond Price =? [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =5x2
1000 =? [(Coupon rate*1000/200)/(1 + 4.5/200)^k]     +   1000/(1 + 4.5/200)^5x2
                   k=1
Coupon rate% = 4.5

19

                  K = Nx2
Bond Price =? [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2
                   k=1
                  K =30x2
Bond Price =? [(7*1000/200)/(1 + 9/200)^k]     +   1000/(1 + 9/200)^30x2
                   k=1
Bond Price = 793.62

Please ask remaining parts separately, questions are unrelated. I have done one bonus
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16. A bond with 5 years to maturity is selling for $1,000 andhas a yield to maturity of 4.50%. If this bond pays its couponpayments semi-annually and par value is $1,000, what is the bond'sannual coupon rate?A. 4.45%B. 4.50%C. 4.89%D. 4.95%E. 5.12%19. Acme Inc. just issued a bond with a $1,000 face value and acoupon rate of 7%. If the bond has a life of 30 years, payssemi-annual coupons, and the yield to maturity is 9%, what will theAcme, Inc. bond sell for?A. $434.95B. $790.45C. $793.62D. $794.53E. $894.5620. What is the price of a five-year bond with a $1,000 face valueand a 5.0% annual coupon rate that currently yields 7.0%? The bondpays annual coupons.A. $784B. $897C. $918D. $1,000E. $1,087

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