Fundamentals of Financial Management W4A2

Fundamentals of Financial Management W4A2 - b. 6.5%...

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Muhammad, Can you help with this? 1. Bond. What is the value of a $1,000 par value bond with annual payments of an a. 11% coupon with a maturity of 20 years and a 15% required return? years interest PVIF PV 1-20 110 6.26 688.53 20 1000 0.06 61.1 750 b. 12% coupon with a maturity of 10 years and a 7% required return? years interest PVIF PV 1-10 120 7.02 842.83 10 1000 0.51 508.35 1351 c. 8% semiannual coupon with a maturity of 10 years and a 11% required return? years interest PVIF PV 1-20 40 11.95 478.02 20 1000 0.34 342.73 821 d. 8% semiannual coupon with a maturity of 20 years and a 6% required return? years interest PVIF PV 1-40 40 23.11 924.59 40 1000 0.31 306.56 1231 2. Bond. What is the yield to maturity of a $1000 par value bond with an a. 10% semiannual coupon and 20 years to maturity and a $1,000 price? The YTM will be 10% as there is no difference between par value and market price.
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Unformatted text preview: b. 6.5% semiannual coupon and 13 years to maturity and a $890 price? Year Cash flows-890 1 32.5 2 32.5 3 32.5 4 32.5 5 32.5 6 32.5 7 32.5 8 32.5 9 32.5 10 32.5 11 32.5 12 32.5 13 32.5 14 32.5 15 32.5 16 32.5 17 32.5 18 32.5 19 32.5 20 32.5 21 32.5 22 32.5 Annualized YTM = 7.86% 23 32.5 24 32.5 25 32.5 26 1032.5 YTM 3.93% c. 7.5% annual coupon and 19 years to maturity and a $788 price? Year Cash flows-788 1 75 2 75 3 75 4 75 5 75 6 75 7 75 8 75 9 75 10 75 11 75 12 75 13 75 14 75 15 75 16 75 17 75 18 75 19 1075 YTM 10.04% d. 4.5% annual coupon and 7 years to maturity and a $800 price?-800 1 45 2 45 3 45 4 45 5 45 6 45 7 1045 YTM 8.39%...
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Fundamentals of Financial Management W4A2 - b. 6.5%...

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