. You are considering a bond with a coupon rate of 10% per annum. Coupons are paidsemiannually. The bond has a face value of e 1000 and matures in 5 years. The yieldto maturity is 11%. What is the value of the bond? Indicated whether the bond istrading at a premium, discount, or at par(21 10 to

Answered: . You are considering a bond with a…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A bond sells for $866.09 and has a coupon rate of 6.40 percent. If the bond has 14 years until maturity, what is the yield to maturity of the bond? Assume semiannual compounding. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
A bond has the following terms: 1) $100 face value, 2) 3-year maturity and 3) 15% annual coupon rate. The bond's current yield-to-maturity is 10% per annum. Which one of the following answers is closest to the bond's duration? (Please round your calculation to the nearest 2nd decimal.) Select one: O a 2.55 years O b. 2.65 years OC 2.75 years O d. 2.85 years O e. 2.95 years
Suppose a ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $1,035.96. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.7% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is%. (Round to two decimal places.)
1. What is the yield to maturity on the following bonds; all have a maturity of 10 years, a face value of 2000, and a coupon rate of 4 percent (paid semiannually). The bond's current prices are: a. $1,180 b. $ 2,400 c. Explain the relationship between yield to maturity and bond prices.
Bond P is a premium bond with a 10 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 8 percent, and have five years to maturity. (Assume par value of K1,000)(i) What is the current yield for Bond P and Bond D?(ii) If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D?(iii)Explain your answers and the interrelationship among the various types of yields.
Calculate the price of a 6.5 percent coupon bond with 27 years left to maturity and a market interest rate of 5 percent. (Assume interest payments are semiannual and par value is $1,000.) Is this a discount or premium bond?
Suppose a ten-year, $1,000 bond with an 8.4% coupon rate and semiannual coupons is trading for $1,035.65. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.9% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is%. (Round to two decimal places.)
You purchase a bond with an invoice price of $1,014. The bond has a coupon rate of 9 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond? Enter the answer with 2 decimals (e.g. 954.23).
A newly issued bond pays its coupons once a year. Its coupon rate is 4.7%, its maturity is 15 years, and its yield to maturity is 7.7%. a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6.7% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding-period return % b. If you sell the bond after one year when its yield is 6.7%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Tax on interest income $ Tax on capital gain $ Total taxes $ c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)…
A 10-year bond with a face value of $1,000 has a coupon rate of 9.0%, with semiannual payments. a. What is the coupon payment for this bond? b. Enter the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ every six months. (Round to the nearest cent.)
Consider a 30-year Bond with $1,000 face value, which offers 10% annual coupon, paid once a year.Assume that interest rates, hence YTM (Yield to Maturity) changed from 6% to 7%. What is the duration of the Bond in years? Enter your answer in the following format: 12.34Hint1: Answer is between 10.24 and 12.77Hint2: Duration = (new bond price - old bond price) * (-100) / old bond price
A. You have a one-year zero coupon bond that pays 1,000 which price today is 909.09. You have a two-year coupon bond with a principal value of 2,000 and coupon rate of 10%. Its price is 1,845.334. Determine what is the term structure of interest rates for years 1 and 2. Draw the curve. B. Compute the duration for the coupon bond and for the zero coupon bond and explain how to compute the yield to maturity (only set the equation in the last case) for the coupon bond. C. Assume the YTM for the coupon bond is 14.74%. What is the modified duration for the two bonds? D. What would the new price of the two bonds be if the yield increases by 5%?

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. You are considering a bond with a coupon rate of 10% per annum. Coupons are paid semiannually. The bond has a face value of e 1000 and matures in 5 years. The yield to maturity is 11%. What is the value of the bond? Indicated whether the bond is trading at a premium, discount, or at par (21 10 to