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

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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. $434.95
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)

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

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