Present value of bond payments
[DOC File]1
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Present Value formulas (these are used in calculating project values, IRRs, and equivalent annual costs): ... Bond Pricing: PV(Bond) = PV (coupon payments ) + PV (final principal payment) Two ways to price a bond: Spot Rates are known: ... As a measure of a bond’s interest rate sensitivity, it is a weight average of the maturities of ...
Calculating the Present Value of a 9% Bond in an 8% Market | Acco…
FIN350 In Class Work No. 2---Bond& Interest Rate. 1. The discount rate that makes the present value of a bond’s payments equal to its price is termed the: A) capital gain yield. B) yield to maturity. C) current yield. D) coupon rate. 2. The coupon rate of a bond equals: A) its yield to maturity. B) coupon as a percentage of its face value.
[DOC File]Chapter 10
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($720,500 = the present value of bond payments, discounted at effective rate. For premium bonds, the effective rate < the stated rate). For both discount and premium bonds, the carrying value approaches the face value as we get closer to maturity (i.e., the premium and discount accounts get smaller over time).
[DOC File]Bonds, Instructor's Manual
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The discount rate that makes the present value of a bond’s payments equal to its price is termed the: A) rate of return. B) yield to maturity. C) current yield. D) coupon rate. Answer: B . 8. What is the yield to maturity for a bond paying $100 annually that has six years until maturity and sells for $1,000? A) 6.0% .
[DOC File]The major formulas for present value (these will reappear ...
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The value of a pure discount bond is the present value of its final redemption amount. Level-coupon bond offer cash payments not just a maturity, but also at regular times in between. It is the present value of its stream of coupon payments plus the present value of its repayment of principal.
[DOC File]Exam Item 19-1 (True or False)
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The government has issued a bond that will pay $1,000 in 25 years. The bond will pay no interim coupon payments. What is the present value of the bond if the discount rate is 10 percent? A firm has an estimated pension liability of $1.5 million due 27 years from today.
[DOC File]Sample midterm
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The bond has 40 coupon payments (=20 years ( 2 payments per year). Apply the annuity formula to calculate the PV of the 40 coupon payments. In addition, the $1,000 payment at maturity must be discounted back 40 periods. ... The price of the stock is the net present value of …
[DOC File]Bond Pricing
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a. expenditure, lease payment cost. b. fixed asset, lease payment cost. c. expenditure, present value of the minimum lease payments. d. fixed asset, present value of the minimum lease payments. LO1. 2. The estimated revenues control account of Star City general fund is eliminated when a. the city’s tax receipts are measurable and available. b.
[DOC File]BONDS & L-T NOTES
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To find the value of the bond with a financial calculator, enter n = 20, rd/2 = I = 5, pmt = 50, FV = 1000, and then press PV to determine the value of the bond. Its value is $1,000. You could then change r = I to see what happens to the bond's value as r changes, and plot the values--the graph would look like the one we developed earlier.
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