Business, 30.03.2020 21:59 mrsclnantambu9794

Suppose a ten-year, $ 1 comma 000 bond with an 8.9 % coupon rate and semiannual coupons is trading for $ 1 comma 035.67. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.4 % APR, what will be the bond's price?

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Answer from: sdolina5

Bond's yield to maturity = 7.60%

Bond's price = $ 904.93

Explanation:

Suppose a ten-year, $1,000 bond with an 8.1% coupon rate and semi-annual coupons is trading for $1,034.69

A. What is the bond's yield to maturity(expressed an an APR with semi-annual compounding)?

fv =1000 , pmt = 8.1%*1000*1/2 = 40.50 , pv = 1034.69, nper= 10*2 = 20

Rate = rate(nper,pmt,pv,fv)

Rate = rate(20,40.50,-1034.69,1000)

Rate = 3.80%

Bond's yield to maturity = 3.80*2 = 7.60%

B. If the bond's yield to maturity changes to 9.6% APR, what will be the bond's price?

fv =1000 , pmt = 8.1%*1000*1/2 = 40.50 , nper= 10*2 = 20, rate = 9.6/2 = 4.8%

Bond's price = pv(rate,nper,pmt,fv)

Bond's price = pv(4.8%,20,40.50,1000)

Bond's price = $ 904.93

Answer from: Quest

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Answer from: Quest

What's the rest of the problem? lol

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Suppose a ten-year, $ 1 comma 000 bond with an 8.9 % coupon rate and semiannual coupons is trading f...

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