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5. Consider the following bonds that pay annual coupons (the next coupon will be paid in one year). Find the present value of each bond assuming a par value of $1,000 and a relevant interest rate of 4%.

Bond

A

B

C

Coupon rate

3%

4%

5%

Time to maturity

1 year

2 years

3 years

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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Related questions

4. (4 points)
(a) Assume that a one year bond that has no interest coupon payment with a maturity value (face value) of $1,000 sold for $900. Show the interest rate that this bond will pay when it matures.
(b) If the prices of similar bonds are selling next month for $950, show the interest rate that these bonds pay when they mature.

A bond that matures in 19 years has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 14 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?

Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1044.89 and has two years to maturity.

a) What is the bond's yield to maturity?

b) If the expected price of this bond next year is $1000. Calculate the expected rate of capital gain/loss and the expected rate of return if the bondholder sells it next year?

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