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Berk Bhd issues bonds that pay interest semi-annually and have maturities of 1 year and 30 years. The bonds have a face value of RM1,000 and an annual coupon rate of 10 percent.
i) If investors have demanded an interest rate of 5 percent on the bond investment, what is the maximum prices to pay for the 1-year bond and 30-year bond?
ii) Suppose that the interest rate has increased to 20%, calculate the values of the 1-year bond and 30-year bond.
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- Answer the following situation show your Complete Solution. Show the formulas. a. A bond with face value of Php 1,000 is selling at Php 950. The maturity of the bond is one year . How much is its gain ? b. A bond with Php5,000 face value pays 10 % coupon rate semi - annually . If the maturity of the bond is 2 years , how much is the coupon paid semi - annually ? Find the total coupon during the life of the bond . Answers ( I already provided the answers just please show the solutions with correct formulas): a. Php 50 is the amount of gain. b. Php 500 is the among of semi-annual coupon. Php 2 000 is the total coupon since there are 4 periods in two years.Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timelineA bond has 10 years until maturity, carries a coupon rate of 9%, and sells for $1,100. Interest is paid annually. a) If the bond has a yeild to maturity of 9% 1 year from now, what will its price be at that time? b) What will be the rate of return on the bond? c) Now assume that interest is paid semannually. What will be the rate of return on the bond? d) If the inflation rate during the year is 3% what is the real rate of return on the bond?
- Suppose that a 30-year government bond has a maturity value of $1000 and a coupon rate of 4%, with coupons paid semiannually. Find the market price of the bond if the yield rate is 3% compounded semiannually. (Round your answer to the nearest cent.)A 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.Suppose that a 5-year 6% bond is purchased between the issuance date and the first coupon date. The days between the settlement date and the next coupon period is 60. There are 90 days in the coupon period given that the coupons are paid quarterly. Suppose the discount rate is 4%. What is the dirty price, clean price, and accrued interest?
- For a company, you plan to buy the following bond: Time to maturity, 6 years; coupon rate, 8%; Coupon payment, annual; Market interest rate, 8%; Face value, $1,000. Using Excel, calculate the duration of the bond. Using Excel, calculate the accumulated value of invested payment(or receipt) when you find market interest rate a year later is now 8%, 9%, and 7%, respectively. Using Excel, calculate geometric average rate of return (or realized compound return).A 10-year government bond has a face value of £100 and an annual coupon rate of 5%. Assume that the interest rate is equal to 6% per year. (a) Calculate the bond’s present value if it pays the interest annually, and also the present value if it pays semi-annually. (b) Calculate the market price of the bond when the interest rate changes to 8% please explain it on a paper with formula, not by excel.Suppose that the current 6-month, 1-year, 1.5-year and 2-year interest rates are 2.2%,3%, 3.5% and 3.75%, respectively. a) Calculate the prices of a 1-year and 2-year Treasury bonds. In each case, assumethe face value of £100 and the coupon rate of 5% per annum and that coupons arepaid semi-annually. Assume continuous compounding. Compare the obtainedresults. Are they consistent with your expectations? b) Calculate the par yield on the 1-year bond with semi-annual coupons
- Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity. Required: a. Find the bond's price today and six months from now after the next coupon is paid. b. What is the total (6-month) rate of return on the bond? Complete this question by entering your answers in the tabs below. Required A Required B Find the bond's price today and six months from now after the next coupon is paid. Note: Round your answers to 2 decimal places. Current price Price after six months $ $ 1,052.42 1,044.52Suppose that a 20-year bond with a coupon rate of 12% is selling at its par value of $100,000. Also suppose that this bond is the deliverable for a futures contract that settles in three months, and the current 3-month interest rate at which funds can be loaned or borrowed is 8% per year. The seller elects to deliver a Treasury bond issue with a conversion factor of 1.20. Also assume that the accrued interest is 7. What is the invoice price that the buyer pays? O $124,600 $125,800 $126,300 $127,100Twalilwisha Limited has issued bonds with a face value of K100, which pay a coupon rate of 6%. Coupon payments are payable semi-annually. The yields on similar bonds are currently 8% per year. The maturity date is in 10 years’ time.(i) What is the value of each bond? (ii) What is the bonds annual effective rate?