Bond Valuation

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1-

Bond Valuation and Yield           
              
A bond has a par value of $1,000, pays $50 semiannually and has a maturity of 10 years.     
              
              
If the bond earns 12% per year, what is the price of the bond?       
              
Rate             
Nper             
PMT             
FV             
Type             
PV             
              
              
What is the yield to maturity for the bond?          
              
Nper             
PMT             
PV             
FV             
Type             
Rate             
              
              
What would be the bond's price if the rate earned declined to 8% per year?        
              
Rate             
Nper             
PMT             
FV             
Type             
PV             
              
              
If the maturity period is reduced to 5 years and the required rate of return is 8%, what would be the price of the bond? 
              
Rate             
Nper             
PMT             
FV             
Type             
PV             
              
              
What is the yield to maturity for the bond when the maturity is 5 years and the required rate of return is 8%?   
              
Nper             
PMT             
PV             
FV             
Type             
Rate             
              
              
What generalizations about bond prices, interest rates and maturity periods can be made based on the calculations made above?
              
2-
Callable Bonds        
         
The following bonds have a par value of $1,000 and the required rate of return is 10%.  
         
Bond XY: 5¼ percent coupon, with interest paid annually for 20 years   
Bond AB: 14 percent coupon, with interest paid annually for 20 years   
         
What is each bond's current market price?      
         
 Bond XYBond AB      
Rate        
Nper        
PMT        
FV        
Type        
PV        
         
         
If current interest rates are 9%, which bond would you expect to be called? Explain.  
             
              
              
              
              
              

 

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PROF. METILDAH
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limra
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topclassjob
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