a. Consider two 20 years bond with annual coupon payments. Bond A has an 8...
60.1K
Verified Solution
Link Copied!
Question
Accounting
a. Consider two 20 years bond with annual coupon payments. Bond A has an 8 percent coupon rate and bond B has a 4 percent coupon rate. If the market yield to maturity is 5 percent:
- Calculate the price of each bond assume a RM100,000 face value.
(6 marks)
- Identify the bonds was traded at premium, par or discount.
(2 marks)
b. Consider a 30 years, zero-coupon bond with a yield to maturity of 5 percent. If the bond is issued with a face value of RM 500,000.
- Calculate the price of the bond.
(3 marks)
- Suppose interest rate suddenly rise so that investors now demand an 8 percent yield to maturity before they invest in this bond. Calculate the price of the bond now with the new yield.
(3 marks)
- Describe the relationship of the bond yields to price of bond.
(2 marks)
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.