Finance Help
| Bond Valuation and Yield | |||||||||||||
| A bond has a par value of $1,000, pays $50 semiannually and has a maturity of 10 years. | |||||||||||||
| If the bond earns 12% per year, what is the price of the bond? | |||||||||||||
| Rate | 12% | ||||||||||||
| Nper | 10 | ||||||||||||
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| What is the yield to maturity for the bond? | |||||||||||||
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| What would be the bond’s price if the rate earned declined to 8% per year? | |||||||||||||
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| If the maturity period is reduced to 5 years and the required rate of return is 8%, what would be the price of the bond? | |||||||||||||
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| What is the yield to maturity for the bond when the maturity is 5 years and the required rate of return is 8%? | |||||||||||||
| Nper | |||||||||||||
| PMT | |||||||||||||
| PV | |||||||||||||
| FV | |||||||||||||
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| Rate | |||||||||||||
| What generalizations about bond prices, interest rates and maturity periods can be made based on the calculations made above? | |||||||||||||
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