Par value of a bond

    • [DOCX File]Part I

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      One of the “Things to Know” was the inverse relationship between bond prices and interest rates. Read this article to understand this concept in more depth, and then answer the questions below. Shaili bought a bond from Penny’s Pickles, Inc at par value ($1000) with a coupon rate of 6% and a maturity date 10 years in the future.

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    • [DOC File]Chapter 10

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      Bond value (LO3) The Lone Star Company has $1,000 par value bonds outstanding at 9 percent interest. The bonds will mature in 20 years. Compute the current price of the bonds if the present yield to maturity is: a. 6 percent. b. 8 percent. c. 12 percent.

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    • [DOC File]Chapter Nine

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      2. Calculate the duration of a two-year, $1,000 bond that pays an annual coupon of 10 percent and trades at a yield of 14 percent. What is the expected change in the price of the bond if interest rates decline by 0.50 percent (50 basis points)? Two-year Bond . Par value = $1,000 Coupon rate = 10% Annual payments. R = 14% Maturity = 2 years

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    • [DOC File]CHAPTER 7

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      After 10 years (40 quarters) you receive the par value. Another 10-year bond has an 8 percent semiannual coupon (that is, the coupon payment is $40 every six months). This bond is selling at its par value, $1,000. This bond has the same risk as the security you are thinking of purchasing.

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    • [DOC File]Exam-type questions

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      The par value is discounted for the full life of the bond. Thus, statements c and d can be eliminated. Since a zero coupon bond’s price today is determined just by the NPV of its par value, all of its payment is discounted for the maximum amount of time, whereas a coupon bond has many payments discounted for less than the maximum amount of time.

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    • [DOC File]Chapter 10 #1 P

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      Apr 03, 2009 · The Hartford Telephone Company has a $1,000 par value bond outstanding that pays 11 percent annual interest. The current yield to maturity on such bonds in the market is 14 percent. Compute the price of the bonds for these maturity dates: a. 30 years. PVA = A * PVIFA (n = 30, i = 14%) Appendix D. PVA = $110 * 7.003 = $770.33

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    • [DOC File]Answers to Text Discussion Questions

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      The par value bond is callable to $1,080 and this may hold down the potential price appreciation of the bond. Even if both bonds increase in value as indicated in parts (a) and (b), the deep discount bond will have the larger percentage gain.

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