On the next seven questions, express monetary answers to the nearest whole dollar and percentages to...

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Finance

On the next seven questions, express monetary answers to thenearest whole dollar and percentages to the
nearest hundredth.
15. The price of a zero-coupon bond with an eight year maturityis $3,852.75. The face value of the bond is
$5,000. What is the yield on the bond? (Assume semi-annualcompounding) (Express the percentage to the
nearest hundredth)

16. Calculate the price of a 7.48% coupon bond with 12 years leftto maturity and a market interest rate of 8.74%.
Assume interest rates are semiannual and par value is $1,000.(Express the monetary value to the nearest
whole dollar.)

17. A 6.75 percent coupon bond with 12 years left to maturity canbe called in 4 years. The call premium is one
year of coupon payments. It is offered for sale at $1,062.75.Assume that interest payments are paid semiannually
and par value is $1,000. What is the yield to call of the bond?(Express the percentage to the
nearest hundredth)

Answer & Explanation Solved by verified expert

3.6 Ratings (273 Votes)

K = Nx2

Bond Price =? [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =8x2

3852.75 =? [(0*5000/200)/(1 + YTM/200)^k] + 5000/(1 + YTM/200)^8x2

k=1

YTM% = 3.28

K = Nx2

Bond Price =? [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =12x2

Bond Price =? [(7.48*1000/200)/(1 + 8.74/200)^k] + 1000/(1 + 8.74/200)^12x2

k=1

Bond Price = 907.48

Please ask remaining parts seperately, questions are unrelated, I have done one bonus

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Transcribed Image Text

On the next seven questions, express monetary answers to thenearest whole dollar and percentages to thenearest hundredth.15. The price of a zero-coupon bond with an eight year maturityis $3,852.75. The face value of the bond is$5,000. What is the yield on the bond? (Assume semi-annualcompounding) (Express the percentage to thenearest hundredth)16. Calculate the price of a 7.48% coupon bond with 12 years leftto maturity and a market interest rate of 8.74%.Assume interest rates are semiannual and par value is $1,000.(Express the monetary value to the nearestwhole dollar.)17. A 6.75 percent coupon bond with 12 years left to maturity canbe called in 4 years. The call premium is oneyear of coupon payments. It is offered for sale at $1,062.75.Assume that interest payments are paid semiannuallyand par value is $1,000. What is the yield to call of the bond?(Express the percentage to thenearest hundredth)