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A ten-year bond pays 11 percent interest on a 1000 face value annually If it currently sells for 1195 what is its approximate yield to maturity?
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∙ 14y ago
A ten-year bond pays 11 % interest on a $1000 face value annually. If it currently sells for $1,195, what is its approximate yield to maturity
Wiki User
∙ 14y ago
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The market interest rate related to a bond is also called the?
"Yield" or "YTM" ("Yield to Maturity")
What is a zero-coupon note?
A zero-coupon note is a note which pays at maturity the value of the note with no separate interest payments.
Why do bond prices and yields vary inversely?
Bonds are valued by discounting the coupon payments and the final repayment by the yield to maturity on comparable bonds. The bond payments discounted at the bond’s yield to maturity equal the bond price. You may also start with the bond price and ask what interest rate the bond offers. This interest rate that equates the present value of bond payments to the bond price is the yield to maturity. Because present values are lower when discount rates are higher, price and yield to maturity vary inversely.
List the key factors that influence the price on bonds in the secondary market?
Supply and demand,Expectations about interest rates and inflation,The bonds face value,The maturity date,The number of coupons remaining to be paid out before maturity.
What is the premium that reflects the risk associated with changes in interest rates for l long-term security?
Maturity Risk Premium (MPR)
When is the interest paid on Business Time Deposit Accounts?
The frequency with which you choose to receive your interest payment depends on the term of your Business Time Deposit Account. For terms of seven through 31 days, interest may be paid only at maturity. For terms of 32 days to one year, interest may be paid monthly, quarterly, semi-annually, annually, or at maturity. For terms greater than one year, interest must be paid at least annually and may be paid monthly, quarterly, or semi-annually.
A 6-year Circular File bond pays interest of 80 annually and sells for 950 What are its coupon rate current yield and yield to maturity?
Bond Pricing. A 6 year circular file bond pays interest of $80 annually, and sells for $950. What are its coupon rate, Current yield, and yield maturity?
A firm has an issue of 1000 par value bonds with a 12 percent stated interest rate outstanding The issue pays interest annually and has 10 years remaining to its maturity date If bonds of similar r?
1268.20
What is a yield to maturity?
A yield to maturity is the internal rate of return on a bond held to maturity, assuming scheduled payment of principal and interest.
If you deposit 10000 in a bank account that pays 8 percent interest annually how much would be deposited in your account after 5 years?
Principle = 10,000/-Interest Rate = 0.08Tenor = 5 YEARSValue of deposit on maturity = Principle X (1+Interest Rate) ^ Tenor= 10,000 X (1+0.08)^5 = Rs 14,693.28
Maturity value of an interest-bearing note payable is the?
Face value plus interest.
Does bond pay interest on maturity?
Yes. At maturity you get the final coupon payment in addition to the return of principal.
What is maturity value?
The new value to a loan or investment after interest.
What is repaid to the investor on a bond's maturity date?
The principle and interest.
The equation for computing interest on an interest bearing note is as follows interest equals maturity value times interest rate times time?
yes
How can you estimate interest rate risk?
Interest rate risk is measured by time to maturity and coupon rate
What makes some bonds sell at a premium while others sell at a discount?
Bonds trade at a premium or discount based on the interest rate demanded by the markets for that specific maturity, credit quality, and details vs. the rate demanded at the time of issue. - Example: Trading at a Discount - For example, the 4.5% US Government bond maturity 02/15/16 is currently trading at a discount. At issuance, you could buy this bond for $100.00 and receive $4.50 every year in interest. However, interest rates are higher today than they were when the bond was issued (currently 4.85% for this maturity/credit quality). Therefore, to receive 4.85% in interest, you must pay less than 100 for the bond you would have paid at issuance. The reverse is true for bonds trading at a premium. If the interest rate had fallen to 4.00%, you would be willing to pay more than 100.00 for the bond.
