1. What is the yield to maturity of a corporate bond with a 3-year maturity, 5 percent coupon (semi-annual payments), a $1,000 face value, if the bond sold for $978.30?
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- (1) Consider a 15-year 7% semiannual pay bond, if the price of the bond per $1,000 of par value is $802.24, and the investor will hold the bond to maturity. What are the following answers? a) Current yield b) Yield to maturity Total coupon interest d) Interest on interest e) Capital gain/LossA semiannual corporate bond has a face value of $1,000, a price of $785.24, a coupon rate of 9.5% and 28 years left to maturity. What is the YTM?1. A corporate bond has a face value of P1,000 and pays a P50 coupon every six months. The bond matures in 12 years and sells at a price of P1,080. a. What is the bond’s nominal yield to maturity? b. What is the bond’s current yield? c. What is the bond’s capital gains yield? d. What is the bond’s capital gain/loss?
- 1. (a) Suppose a 6 percent coupon, $1,000 bond with ten years left to maturity is selling for $1,100. What is the yield, assuming that interest is paid quarterly? (b) Assume that the bond in (a) above pays interest semi-annually. What would the bond sell for, given that the investor/market wants to earn the same yield as calculated in (a)? (c) Assume that the bond in (a) above pays interest monthly. What would the bond sell for, given that the investor/market wants to earn the same effective yield as calculated in (a 2. A firm has just issued (January 1, 2018) a bond that has a face value of $1,000, a coupon rate of 7 percent paid semi-annually (June 30, December 31), and matures in 10 years. The bonds were issued with a yield to maturity of 6%. What price were the bonds issued at? Assume that on July 1, 2020, the bond trades to earn an effective yield of 9%. At what price should this bond be trading for on July 1, 2020? PRICE WHEN ISSUED: PRICE ON JULY 1, 2020:What is the coupon rate for a bond with a face value of $1,000, 24 years to maturity, a current price of $993, and a yield to maturity (YTM) of 9.09%?Answer the following: B1- What is the cash flow of a 6% coupon bond that pays interest annually, matures in 9 years, and was originally priced at par value.of $1,000? b. Assuming a current market yield of 5%, what is the price of this bond? B2-Assuming a current market yield of 8.5%, what is the price of the bond? B3-Assuming a market yield of 1.5%, what is the price of the bond?
- Q1. (a) Suppose a 6 percent coupon, $1,000 bond with ten years left to maturity is selling for $1,100.What is the yield, assuming that interest is paid quarterly? (b) Assume that the bond in (a) above pays interest semi-annually. What would the bond sell for, given that the investor/market wants to earn the same yield as calculated in (a)? c) Assume that the bond in (a) above pays interest monthly. What would the bond sell for, given that the investor/market wants to earn the same effective yield as calculated in (a)? Q2. A firm has just issued (January 1, 2019) a bond that has a face value of $1,000, a coupon rate of 6 percent paid semi-annually (June 30, December 31), and matures in 8 years. The bonds were issued with a yield to maturity of 7%. What price were the bonds issued at? Assume that on July 1, 2021, the bond trades to earn an effective yield of 10%. At what price should this bond be trading for on July 1, 2021? PRICE WHEN ISSUED: PRICE ON JULY 1, 2021: Q3. (a) (a) You are…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.a. What is the price (expressed as a percentage of the face value) of a 1-year, zero-coupon corporate bond with a AAA rating and a face value of $1,000? b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? Note: Assume annual compounding.
- A bond: pay $75 each year in interest, and a $1,000 payment at maturity. The $1,000 is called? A) couponB) face valueC) discountD) yield(a) Compute the market price (Vb) of the following bonds: (6)$1,000 par value, 10-yr maturity, and 8% coupon rate that is paid semi-annually? Assume the yield to maturity of 12%.$1,000 par value, 10-yr maturity, and 6% coupon rate that is paid semi-annually? Assume the yield to maturity of 12%.$1,000 par value, 10-yr maturity, and 8% coupon rate that is paid semi-annually? Assume the yield to maturity of 6%.(b) Based on your answers comment on the relationship (what happens to one variable when the other goes up/down) of (a) price with yield to maturity and (b) price with coupon rate. (4)What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does the fact that it sells at a discount or at a premium tell you about the relationship between rd and the coupon rate?