1. Suppose a five-year, $ 1000 bond with annual coupons has a price of $ 898.64 and a yield to maturity of 5.5%. What is the bond's coupon rate? 2.) The yield to maturity of a $ 1000 bond with a 6.8 % coupon rate, semi-annual coupons, and two years to maturity is 7.8 % APR, compounded semi-annually. What must its price be? 3.) Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): The timeline starts at Period 0 and ends at Period 30. The timeline shows a cash flow of $ 19.01 each from Period 1 to Period 29. In Period 30, the cash flow is $ 19.01 plus $ 1,000. Period 1,2,29,30 Cash Flows: $ 19.01, $19.01,$19.01, $19.01 + $1,000 a. What is the maturity of the bond ( in years)? b. What is the coupon rate (as a percentage )? c. What is the face value?
1. Suppose a five-year, $ 1000 bond with annual coupons has a price of $ 898.64 and a yield to maturity of 5.5%. What is the bond's coupon rate? 2.) The yield to maturity of a $ 1000 bond with a 6.8 % coupon rate, semi-annual coupons, and two years to maturity is 7.8 % APR, compounded semi-annually. What must its price be? 3.) Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): The timeline starts at Period 0 and ends at Period 30. The timeline shows a cash flow of $ 19.01 each from Period 1 to Period 29. In Period 30, the cash flow is $ 19.01 plus $ 1,000. Period 1,2,29,30 Cash Flows: $ 19.01, $19.01,$19.01, $19.01 + $1,000 a. What is the maturity of the bond ( in years)? b. What is the coupon rate (as a percentage )? c. What is the face value?
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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Transcribed Image Text:1. Suppose a five-year, $ 1000 bond with annual
coupons has a price of $ 898.64 and a yield to maturity
of 5.5%. What is the bond's coupon rate? 2.) The
yield to maturity of a $ 1000 bond with a 6.8% coupon
rate, semi-annual coupons, and two years to maturity
is 7.8 % APR, compounded semi-annually. What must
its price be? 3.) Assume that a bond will make
payments every six months as shown on the following
timeline (using six-month periods): The timeline starts
at Period 0 and ends at Period 30. The timeline shows
a cash flow of $ 19.01 each from Period 1 to Period 29.
In Period 30, the cash flow is $ 19.01 plus $ 1,000.
Period 1, 2,29,30 Cash Flows: $ 19.01, $19.01, $19.01,
$19.01 + $1,000 a. What is the maturity of the bond (
in years)? b. What is the coupon rate (as a percentage
)? c. What is the face value?
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