What is the yield to maturity for the bond?

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Bond Valuation and Yield

A bond has a par value of $1,000, pays $50 semiannually and has a maturity of 10 years.

If the bond earns 12% per year, what is the price of the bond?

Rate
Nper
PMT
FV
Type
PV

What is the yield to maturity for the bond?

Nper
PMT
PV
FV
Type
Rate

What would be the bond's price if the rate earned declined to 8% per year?

Rate
Nper
PMT
FV
Type
PV

If the maturity period is reduced to 5 years and the required rate of return is 8%, what would be the price of the bond?

Rate
Nper
PMT
FV
Type
PV

What is the yield to maturity for the bond when the maturity is 5 years and the required rate of return is 8%?

Nper
PMT
PV
FV
Type
Rate

What generalizations about bond prices, interest rates and maturity periods can be made based on the calculations made above?


Callable Bonds

The following bonds have a par value of $1,000 and the required rate of return is 10%.

Bond XY: 5¼ percent coupon, with interest paid annually for 20 years
Bond AB: 14 percent coupon, with interest paid annually for 20 years

What is each bond's current market price?

   Bond XY       Bond AB
   Rate
  Nper
  PMT
  FV
  Type
  PV


If current interest rates are 9%, which bond would you expect to be called? Explain.

Reference no: EM13888863

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