Suppose your friend is debating purchasing a bond that has a $1,000 par value, 13 years to maturity, and a 7% annual coupon. Your friend would like to determine the yield to maturity if the bond sells for a price of $980. In order to use your financial calculator to solve for the rate of return on this bond, you need to know the following information: PV: the bond's value or price N: the number of years before the bond matures PMT: the dollars of interest paid each year, which equals the coupon rate times the par value of the bond FV: par, or maturity, value of the bond Complete the following table by selecting the appropriate values for N, PV and PMT. Then use your financial calculator to solve for the rate of return, and complete the final row of the table. Input $1,000 Keystroke I/Y PV PMT FV Output Suppose your friend wants to know what price the bond will be in three years assuming the yield to maturity remains constant. To calculate what the bond price will be three years from now, the new value for N is years. Because this bond is trading at a , you should expect that the bond price three years from now will be $980.
Suppose your friend is debating purchasing a bond that has a $1,000 par value, 13 years to maturity, and a 7% annual coupon. Your friend would like to determine the yield to maturity if the bond sells for a price of $980. In order to use your financial calculator to solve for the rate of return on this bond, you need to know the following information: PV: the bond's value or price N: the number of years before the bond matures PMT: the dollars of interest paid each year, which equals the coupon rate times the par value of the bond FV: par, or maturity, value of the bond Complete the following table by selecting the appropriate values for N, PV and PMT. Then use your financial calculator to solve for the rate of return, and complete the final row of the table. Input $1,000 Keystroke I/Y PV PMT FV Output Suppose your friend wants to know what price the bond will be in three years assuming the yield to maturity remains constant. To calculate what the bond price will be three years from now, the new value for N is years. Because this bond is trading at a , you should expect that the bond price three years from now will be $980.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose your friend is debating purchasing a bond that has a $1,000 par value, 13 years to maturity, and a 7% annual coupon. Your friend would like
to determine the yield to maturity if the bond sells for a price of $980.
In order to use your financial calculator to solve for the rate of return on this bond, you need to know the following information:
PV:
the bond's value or price
N:
the number of years before the bond matures
PMT: the dollars of interest paid each year, which equals the coupon rate times the par value of the bond
FV:
par, or maturity, value of the bond
Complete the following table by selecting the appropriate values for N, PV and PMT. Then use your financial calculator to solve for the rate of return,
and complete the final row of the table.
Input
$1,000
Keystroke
I/Y
PV
PMT
FV
Output
Suppose your friend wants to know what price the bond will be in three years assuming the yield to maturity remains constant.
To calculate what the bond price will be three years from now, the new value for N is
v years.
Because this bond is trading at a
, you should expect that the bond price three years from now will be
$980.
Transcribed Image Text:Complete the following table by selecting the appropriate values for N, PV and PMT. Then use your financial calculator to solve for the rate of return,
and complete the final row of the table.
Input
$1,000
Keystroke
N
I/Y
PV
PMT
FV
Output
Suppose your friend wants to know what price the bond will be in three years assuming the yield to maturity remains constant.
To calculate what the bond price will be three years from now, the new value for N is ▼ years.
Because this bond is trading at a
, you should expect that the bond price three years from now will be
$980.
Complete the following table by selecting the new appropriate values for N, I/Y, and PMT. Then use your financial calculator to solve for the present
value of this cash flow stream, and complete the final row of the table.
Input
$1,000
Keystroke
I/Y
PV
PMT
FV
Output
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