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harleyguerrieri
05.12.2019 •
Business
Assume that a $1,000,000 par value, semiannual coupon us treasury note with five years to maturity has a coupon rate of 6%. the yield to maturity (ytm) of the bond is 11.00%. using this information and ignoring the other costs involved, calculate the value of the treasury note:
a.) $841,635.85b.) $715,390.47c.) $530,230.59d.) $1,009,963.02based on your calculations and understanding of semiannual coupon bonds, complete the following statement: when valuing a semiannual coupon bond, the time period variable (n) used to calculate the price of a bond reflects the number of (options are: a.) 12-month, b.) 4-month, c.) annual, d.) 6-month) periods remaining in the bonds life.
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Ответ:
First question a.) $841,635.85
Second question d.) 6 - month
Explanation:
FV = 1,000,000
PMT = 30,000
rate = 5.5%
N = 8
use PV function in business calculator
The Excel PV function is a financial function that returns the present value of an investment. You can use the PV function to get the value in today's dollars of a series of future payments, assuming periodic, constant payments and a constant interest rate. Get the present value of an investment. present value.
Ответ:
the price value of the treasury note
= $815,205.15
✓ 6 month period
When valuing a semi-annual coupon bond, the time period n used to calculate the price of bond reflects the number of "6month" periods remaining in bond life.
Explanation:
Using the price of bond formula below:
PV = [C × 1 - (1 + r)^-n /r] + FV/(1+r)^n
C= coupon rate = 6% of par value
6% × 1,000,000 = $60,000
FV = face value = $1,000,000
YTM / r = 11%= 0.11
n = number of years to maturity= 5
PV= 60,000 × 1 - (1+0.11)^-5 / 0.11 + 1,000,000 /(1+0.11)^5
PV = 60,000 × 1 - (1.11)^-5 / 0.11 + 1,000,000 / (1.11)^5
=60,000 × (1 - 0.593451328)/0.11 + 1,000,000 / 1.68505816
= 60,000 × (0.406548672) / 0.11 + 593,451.326
= (60,000 × 3.69589702) + 593,451.326
PV =$(221,753.821 + 593,451.326)
PV = $815,205.147 as the price value of the treasury.
✓ semiannual coupon bond means two coupon rate payments made in a year.
We have two "6months" in a year.
This means that the first interest rate amount is paid in the first 6 months while the other interest rate payment is made in the other 6months.
Ответ:
D. Picking