5.1 Jackson Corporations bonds have 12 years stay to maturity. post is gainful annually...? Jackson Corporations bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par survey, and the verifier interest come out is 8%. The bonds have a fail to maturity of 9%. What is the market price of these bonds?
P = F*r*[1 -(1+i)^-n]/i + C*(1+i)^-n
F = par value
C = maturity value
r = coupon rate per coupon pay period
i = effective interest rate per coupon allowance period
n = number of coupon payments remaining
In this problem F = one thousand. And, since we are not given the maturity value, we can exact that it is the same as the par value. Therefore, C = coulomb0.
r = .08
i = .09
n = 12
Plug the numbers into the equation: light speed0*.08 * (1 - 1.09^-12)/.09 + coulomb0*1.09^-12 = $928.39
5.2 Wilson Wonderss bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10% the bonds sell at a price of $850. What is their ease up to maturity?
date to maturity = 12 years
Par value = $1,000
Coupon rate = 10%
Price of the bond = $850
prise of the bond=t=1nPar value*Coupon rate1+YTMt+Par value1+YTMn
assumption:| | |
Par value| $1,000 | |
Coupon rate| 10%| |
Time to maturity| 12| years|
Yield to maturity| 12.475%| |
yr| Coupon payment| Discounted with YTM|
1| $ one hundred | $88.91|
2| $100 | $79.05|
3| $100 | $70.28|
4| $100 | $62.49|
5| $100 | $55.55|
6| $100 | $49.39|
7| $100 | $43.91|
8| $100 | $39.04|
9| $100 | $34.71|
10| $100 | $30.86|
11| $100 | $27.44|
12| $100 | $24.40|
12| $1,000 | $243.97|
| Value of the bond| $850.01|
5-6 The trustworthy risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury credential yields 6.3%. What is the maturity risk premium for the 2-year security?
r = r* + IP + MRP...If you want to get a full essay, decree it on our website: Orderessay
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