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mt480 unit 7 lab

Paul White bought 10-year bonds issued by Harvest Foods five yearsago for

$938.95. The bonds make semiannual coupon payments at a rate

of 9.5 percent. If the current price of the bonds is $1,046.77, what is the yield

that Paul would earn by selling the bonds today? (Round answer to 2 decimal

places, e.g. 15.25%.)

Face Value - $1,000

Purchase Price = $938.95

Selling price = $ 1046.77

Annual Coupon Rate = 9.5%

Semiannual coupon Rate = 4.75%

Semiannual Coupon = 4.75% * $1000

Semiannual Coupon = $47.5

Semiannual Holding Yield be i%

$ 938.95 = $42 * PVIFA (i% , 10) + $1046.77 * PVIF(i% , 10)

Using fincancial Calculator

N = 10

PV -938.95

PMT = 47.5

FV = 1046.77

I = 5.48%

Semiannnual Yield = 5.48%

Annual Yield = 2* 5.48%

Anuual Yield = 10.96%

So Paul would earned yield of 10.96 % by selling bonds today.

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2: Calculate the price of a five-year bond that has a coupon rate of 8.5 percent

paid annually. The current market rate is 5.15 percent.

Price of annual bond:-

=PV(5.15%,5,8.5%*1000,1000)

=1144.44

Oriole Corp. issued a four-year bond one year ago with a coupon rate

of 8.0 percent. The bond pays interest semiannually. If the yield to maturity

on this bond is 11 percent, what is the price of the bond?

M = $1000, n = 2 * 2 = 4 semi-annual periods, C = 8% *$1000/2 = $40 (semi-

annually), i = 11%/2 = 5.5% (semi-annually)

P = 40 * 1-1/(1+0.055)

/ 0.055 + 1000 / (1+0.055)

= 140.07 + 807.10

P = $947.173

Carla Vista Industries has a three-year bond outstanding that pays

a 7.80 percent coupon rate and is currently priced at $938.05. What is the

yield to maturity of this bond? Assume annual coupon payments

Current Bond Price = $938.05

Bond Face Value = $1000

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mt480 unit 7 lab 1: Paul White bought 10-year bonds issued by Harvest Foods five yearsago for $938.95. The bonds make semiannual coupon payments at a rate of 9.5 percent. If the current price of the bonds is $1,046.77, what is the yield that Paul would earn by selling the bonds today? (Round answer to 2 decimal places, e.g. 15.25%.) Face Value - $1,000 Purchase Price = $938.95 Selling price = $ 1046.77 Annual Coupon Rate = 9.5% Semiannual coupon Rate = 4.75% Semiannual Coupon = 4.75% * $1000 Semiannual Coupon = $47.5 Semiannual Holding Yield be i% $ 938.95 = $42 * PVIFA (i% , 10) + $1046.77 * PVIF(i% , 10) Using fincancial Calculator N = 10 PV -938.95 PMT = 47.5 FV = 1046.77 I = 5.48% Semiannnual Yield = 5.48% Annual Yield = 2* 5.48% Anuual Yield = 10.96% So Paul would earned yield of 10.96 % by selling bonds today. 2: Calculate the price of a five-year bond that has a coupon rate of 8.5 percent paid annually. The current market rate is 5.15 percent. Price of annual bond:=PV(5.15%,5,8.5%*1000,1000) =1144.44 3: Oriole Corp. issued a four-year bond one year ago with a coupon rate of 8.0 percent. The bond pays interest semiannually. If the yield to maturity on this bond is 11 percent, what is the price of the bond? M = $1000, n = 2 * 2 = 4 semi-annual periods, C = 8% *$1000/2 = $40 (semiannually), i = 11%/2 = 5.5% (semi-annually) P = 40 * 1-1/(1+0.055)4 / 0.055 + 1000 / (1+0.055)4 = 140.07 + 807.10 P = $947.173 4: Carla Vista Industries has a three-year bond outstanding th ...
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