Ch 7 BondsBond Valuation:Callaghan bonds have 10 yrs remaining to maturity. Interest is paid annually, they have a $1000 par value, the coupon interest rate is 8% and the yield to maturity is 9%. What is the bond price?A: N = 10; I/YR = YTM = 9%; PMT = 0.08 1,000 = 80; FV = 1000; PV = VB = ?PV = $935.82.Yield to maturity and future price: A bond has a $1000 par value, 10 yrs to maturity and a 7% annual coupon and sells for $985.a. What is the ield to maturity (YTM)?b. Assume the YTM remains constant for the nest 3 yrs. What will the price for 3 yrs from today?a.N = 10; PV = -985; PMT = 70; FV = 1000; YTM = ?Solve for I/YR = YTM = 7.2157% ≈7.22%.b.N = 7; I/YR = 7.2157; PMT = 70; FV = 1000; PV = ?Solve for VB= PV = $988.46.Bond valuation: Nung Corp. outstanding bonds have a $1000 par value a 9% semiannual coupon, 8 yrs to maturity, and a 8.5% YTM. What is the bond price?The problem asks you to find the price of a bond, given the following facts: N = 2 ×8 = 16; I/YR = 8.5/2 = 4.25; PMT = 45; FV = 1000.With a financial calculator, solve for PV = $1,028.60.YIELD TO MATURITY
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