Ask Question
BusinessBusiness
27 December, 19:43

Assume that Treasury bonds with a par value of $1,000,000 have 3 years to maturity and a coupon rate of 6%. The yield to maturity is 11% and coupon is paid semi-annually. What is the value of the bonds?

+1
Answers (1)
  1. 27 December, 20:07
    0
    The value of the bonds is $ 877,814.

    Explanation:

    The value of bond can be calculated by discounting all future cash flow using effective rate of retun. Detail calculations are given below.

    Future Value = Redemption present value (RPV) + Present value of interest (PVI)

    RPV = 1,000,000 (1+11%) ^-3 = $ 731,191 - A

    PVI = 60,000 * Annuity factor = 146,623 - B

    Future Value = A + B = $ 877,814

    Annuity factor = (1 - (1+i%) ^-n) / i% = (1 - (1+11%) ^-3) / 11% = 2.444
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Assume that Treasury bonds with a par value of $1,000,000 have 3 years to maturity and a coupon rate of 6%. The yield to maturity is 11% ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Has a desire to influence others, be responsible for them, and have authority over them. it can be described as her:
Answers (1)
The embargo created an artificial drop in the supply of oil. how would a natural shortage differ from an embargo situation
Answers (1)
What should the certified volunteer preparer do before starting the tax return? A. Make sure all questions on Form 13614-C are answered B. Change "Unsure" answers to "Yes" or "No" based on a conversation with the taxpayer C.
Answers (2)
The managers of Coastal Imports are having a meeting to decide whether the company should raise prices on its best-selling products.
Answers (1)
An employee with special skills who has agreed not to work for a competitor may be enjoined from breaching his or her contract and working for that competitor by: A. a mandatory injunction. Select one: a. a mandatory injunction. b.
Answers (1)
New Questions in Business
Which of the following is the best time to use the bc address field
Answers (1)
Difference between judgement and intuition
Answers (1)
Adrienne is a nonexempt employee who works for a firm that has an elected workweek composed of four 10-hour days and pays overtime after 40 hours worked per week.
Answers (1)
Doug is 18 years old and has decided to run for president when he turns 35. He has set which type of goal? A. long-term B. short-term C. unattainable D. unrealistic
Answers (1)
On January 1, 2018, Parker Company issued bonds with a face value of $80,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year.
Answers (1)
Home » Business » Assume that Treasury bonds with a par value of $1,000,000 have 3 years to maturity and a coupon rate of 6%. The yield to maturity is 11% and coupon is paid semi-annually. What is the value of the bonds?
Sign Up Forgot Password?