## Calculate the value of bonds, Financial Accounting

Assignment Help:

Calculate the value of each of the following bond

 Issuer Face Value Coupon Rate Maturity Bid Yield Bid Price Japan 100,000,000 ¥ 4.100 % 06/04 0.910 % 115.3660 Britain 1,000,000 £ 5.750 % 12/09 5.200 % 104.3800 U.S. 1,000,000 \$ 5.250 % 05/04 5.740 % 97.9375

Calculate the value of each of the above bonds in U.S dollars given the following

Spot (\$ / ¥) = 0.008422

Spot (\$ / £) = 1.596700

SOLUTION:

The FV of Japan Bond = 100,000,000 ¥

Bid price = 115.3660

Hence Value of Bond = 115,366,000 ¥

Spot conversion rate = 0.008422 (\$ / ¥)

Hence Value of Japan bond in US \$ is = 115,366,000 * 0.008422 = 971,612.5 \$

The FV of Britain Bond = 1,000,000 £

Bid price = 104.38

Hence Value of Bond = 1,043,800 £

Spot conversion rate = 1.5967 (\$ / £)

Hence Value of Britain bond in US \$ is = 1,043,800 * 1.5967 = 1,666,635 \$

The FV of US Bond = 1,000,000 \$

Bid price = 97.9375

Hence Value of Bond = 979,375 \$

Spot conversion rate = 1 (\$ / \$)

Hence Value of U.S. bond in US \$ is = 979,375 * 1.00 = 979,375 \$

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