# Finance – bonds | Business & Finance homework help

I am struggling in calculating bonds.  Below is the requirements:

#### How many pages is this assigment?

Assume interest rates for bonds today is 5% for an AAA rated bond. Calculate the price of the bond you have selected relative to the 5%. Is the bond selling at a premium or a discount? Why? Be sure to show how you arrived at your answer.  What other factors may influence the value of a bond?

Here is what I have done so far:

Assume interest rates for bonds today is 5% for an AAA rated bond. Calculate the price of the bond you have selected relative to the 5%.

I selected the bond Goldman Sachs Group Inc., Non-callable, Semi-Annual coupon frequency payment

Price: 101.02

Coupon: 5.125%

Yield to Maturity = -3.694%

Current Yield: 5.073

The semi-annual coupon rate is 2.5625 (5.125 / 2%).  The assumed interest rate of 5% is displayed as .25 (5% / 2%).  This is a 10 year bond so the number of periods is 20 since this is paid semi-annually (10 * 2).

PVo = ( coupon) (1 – [1/ (1 + r)ᵐ] )     + ( par value )

R                                  (1 + r)ᵐ

PVo = (2.56) (1 – [1/(1 + .025)20])  +  (1,000)

.025                  (1 + .025)20

PVo = (2.56) (1-[1/(1.025)20])  +  (1,000)

.025                           (1.025)20

Here is the information on the bond:

 GOLDMAN SACHS GROUP INC As of 3-Dec-2015

 Price: 101.02 Coupon (%): 5.125 Maturity Date: 15-Jan-2015 Yield to Maturity (%): -3.694 Current Yield (%): 5.073 Fitch Ratings: A Coupon Payment Frequency: Semi-Annual First Coupon Date: 15-Jul-2005 Type: Corporate Callable: No

 Quantity Available: 7 Minimum Trade Qty: 2 Dated Date: 12-Jan-2005 Settlement Date: 4-Dec-2014

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