w is information about three $10000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 14%. Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value. Bond Coupon Rate (%) Maturity (years) 1 8 5 2 14 10 3 16 15 2. Using the Interpolation Method to calculate the YTM for the below Bonds: > The par value $18000 > Coupon Rate 10% every year
1. Below is information about three $10000 par value bonds, each of which pays coupon semiannually. The required rate of return on each bond is 14%.
Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value.
Bond |
Coupon Rate (%) |
Maturity (years) |
|
|
|
1 |
8 |
5 |
2 |
14 |
10 |
3 |
16 |
15 |
2. Using the Interpolation Method to calculate the YTM for the below Bonds:
> The par value $18000
> Coupon Rate 10% every year
> Maturity period 10 years
> Market
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Solved in 5 steps
Coupon rate=8%
Annual coupon=0.08 x 10000=$800
Maturity period=n=5years
Price of bond=Coupon x 1-(1+r)-nr+10000(1+r)n=80 x 1-1.14-50.14+100001.145=$7940.15
Price of bond=$7940.15
Please explain the answer how to get $7940.15. Is it possible to calculate using Vb = I (PVIFA kb%, n ) + M (PVIFkb%, n) to find the
Attached together the PVIF & PVIFA table below for references. Thank you!