This preview shows pages 1–2. Sign up to view the full content.
Q5.1
P5.1
Years to Mat:
12
Coupon rate:
8%
Value of bond =
$928.39
Annual Pmt:
$80
P v = FV:
$1,000
9%
P5.10
Years to Mat:
5
Coupon rate:
9%
Annual Pmt:
$90
Going rate, r =YTM:
13.98%
Current price:
$829
Par value = FV:
$1,000
P5.12
Periods to maturity = 10*2 =
20
Coupon rate:
12%
Define each of the following terms:
b. Par value; maturity date; coupon payment; coupon interest rate
g. Current yield ( on a bond); yield to maturity ( YTM); yield to call ( YTC)
b.
The par value is the stated face value of the bond;
Bonds generally have a specified maturity date on which the par value must be repaid.
The coupon payment, which is fixed at the time the bond is issued, remains in force during the
When this coupon payment, as it is called, is divided by the par value, the result is the coupon
g.
The current yield is the annual interest payment divided by the bonds current price.
What rate of interest would you earn on your investment if you bought the bond and held it to
the interest rate generally discussed by investors when they talk about rates of return.
If current interest rates are well below an outstanding bonds coupon rate, then a callable bond
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
 Spring '09
 Nigel
 Interest, Interest Rate

Click to edit the document details