High School

We appreciate your visit to Consider the following three bond quotes 1 A treasury bond quoted at 105 4688 2 A corporate bond quoted at 96 20 3 A municipal. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

Consider the following three bond quotes:

1. A treasury bond quoted at 105.4688
2. A corporate bond quoted at 96.20
3. A municipal bond quoted at 100.60

If the treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars? (Do not round intermediate calculations and round your final answers to 2 decimal places.)

Additionally, if a corporate bond has a current yield of 6.39 percent and a price quote of 97.8, what is the coupon rate?

Answer :

The price of the three bonds in dollars is Treasury bond $1054.69, Corporate bond $962, and Municipal bond $5030. The bond prices are obtained by multiplying the bond quote by the par value. The bond quotes are already in decimals. The corporate and Treasury bonds have a par value of $1000, while the municipal bond has a par value of $5000.

Therefore, the price of the Treasury bond = 105.4688 × $1000 = $1054.69, the price of the Corporate bond = 96.20 × $1000 = $962, and the price of the Municipal bond = 100.60 × $5000 = $5030. Therefore, the price of these three bonds in dollars are Treasury bond $1054.69, Corporate bond $962, and Municipal bond $5030. To find the coupon rate, we use the formula for current yield:

Current Yield = Coupon Payment / Bond Price × 100

Since we know the bond price and current yield, we can calculate the coupon payment. The bond's current yield is 6.39%. Therefore,

Current Yield = 6.39% = Coupon Payment / 97.8 × 100

Coupon Payment = (6.39/100) × 97.8 = $6.24

Coupon payment is $6.24.

Therefore, the coupon rate isCoupon Rate = Coupon Payment / Par Value × 100= $6.24 / $100 × 100= 6.24%Thus, the coupon rate is 6.24%.

Learn more about coupon payment: https://brainly.com/question/17151706

#SPJ11

Thanks for taking the time to read Consider the following three bond quotes 1 A treasury bond quoted at 105 4688 2 A corporate bond quoted at 96 20 3 A municipal. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!

Rewritten by : Barada