kwesa corporation has a premium bond making semiannual payments . the bond pays a 9% coupon,...

50.1K

Verified Solution

Question

Finance

kwesa corporation has a premium bond making semiannual payments. the bond pays a 9% coupon, has a YTM of 7%, and has 13 years tomaturity. the modigliani company has a discount bond makingsemiannual payments. This bond pays 7%coupon, has YTM of 9%, andalso has 13 years to maturity. if interest rate remain unchanged,what do you expect the price of these bonds to be?
i) a year from now
ii) in 3 years
iii) in 8 years
iv) in 12 years
whats going on here

Answer & Explanation Solved by verified expert

3.6 Ratings (465 Votes)

i Price of Kwesa bond is calculated using PV function in Excel rate 7 2 converting annual YTM into semiannual YTM nper 12 2 12 years left to maturity with 2 semiannual coupon payments each year pmt 45 semiannual coupon payment face value coupon rate 2 100 9 2 fv 100 face value receivable on maturity PV is calculated to be 11606 Price of Modigliani bond is calculated using PV function in Excel rate 9 2 converting annual YTM into semiannual YTM nper 12 2 12 years left to maturity with 2 semiannual coupon payments each year pmt 35 semiannual coupon payment face value See Answer

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!

Become a Member