Purchase Solution

Estimating the fair value of a bond

Not what you're looking for?

Ask Custom Question

Find the value of a semiannual coupon bond with a face value of $1000, with an annual coupon rate of 15 percent, and with 24 years remaining until maturity, and with an annual interest rate (Yield to Maturity) of 17.48 percent. Of the options below, which one is correct?

Purchase this Solution
Solution Summary

Solution describes the steps to estimate the value of a coupon paying bond.

Solution Preview

The Fair value of a bond is given by

Fair value of bond =Present value of annual coupon payments + Present ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

View More Free Quizzes
Related BrainMass Solutions

  • Estimating price of a bond

    Solution describes the steps for estimating fair value of a coupon paying bond.

  • Estimating Price of a coupon paying bond

    231609 Estimating Price of a Coupon Paying Bond What is the price of a 10 year $1000 Par Value Bond if the coupon rate is 10% (pays $100 a year if dividends paid annually) with 8 years to go to maturity.

  • Estimating price of a coupon paying bond

    232036 Steps for Estimating Price of a Coupon Paying Bond You are considering purchasing a bond at the end of this year. The bond has a coupon rate of 10.5%, interest payments are made annually, and the bond matures in 20 years.

  • IRR for project and fair price for a Bond

    This hellps in estimating the IRR for project and fair price for a bond

  • 10-year Term Premium

    Solution: "Term premium" means the extra yield of a long-dated bond over a series of shorter bonds covering the same period.

  • The importance of corporate valuation in the M&A process

    The fair market value of Target Company’s tangible assets is $15.00 million and the fair market value of its intangible assets is $10 million. The fair market value of assumed liabilities is $5 million.

  • Fair value of the bond

    283478 Bond Valuation: Given the facts, what is the fair value of this bond? A $1000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bonds rate is 7.4%. What is the fair value.

  • Economics - Money & Banking

    amount=Face Value=M=$1000 Fair Value of bond at the time of purchase= C/i*(1-1/(1+i)^n)+M/(1+i)^n Fair Value of bond at the time of purchase = 100/12%*(1-1/(1+12%)^1)+1000/(1+12%)^1 =$982.14 d.

  • What is fair value of bond using Excel to calculate.

    275737 What is fair value of bond using Excel to calculate. A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond's coupon rate is 7.4%. What is the fair value of this bond?

View More Related Solutions