14. An analyst observe a widget & Co. 7.125 %, 4-year, semiannual - pay bond trading at 102.347% of par (where par = $1,000). The bond is callable at 101% in two years and putable at 100% in two years. What is the bond's current yield? A. 6.962% B. 7.500% C. 7.426 % D. 7.328%

14. An analyst observe a widget & Co. 7.125 %, 4-year, semiannual - pay bond trading at 102.347% of par (where par = $1,000). The bond is callable at 101% in two years and putable at 100% in two years. What is the bond's current yield? A. 6.962% B. 7.500% C. 7.426 % D. 7.328%

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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Question

14. An analyst observe a widget & Co. 7.125 %, 4 - year, semiannual - pay bond trading at 102.347% of par (where par = $1,000). The bond is callable at
101% in two years and putable at 100% in two years. What is the bond's current yield? A. 6.962% B. 7.500% C. 7.426% D. 7.328%

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A 7% annual coupon bond has a maturity of three years and a yield to maturity on an annual basis of 8%. For the next two years, interest rates stay at 8% and thereafter they change to 7%. Which of the following is closest to the amount of reinvestment income on the bond to its final maturity if the par value of the holding is $1,000. A. $15.04B. $15.79C. $16.55
None
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A 20-year, 10% monthly-pay bond has a par value of $1,000. If the price of the bond is $887.14, its yield-to-maturity (YTM) is closest to A. 11.44%. B. 12.29%. C. 14.92%. D. 35.05%.
Last year Carson Industries issued a 10-year, 13% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,065 and it sells for $1,200. a. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: % YTC: % Would an investor be more likely to earn the YTM or the YTC? -Select- b. What is the current yield? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Round your answer to two decimal places. % Is this yield affected by whether the bond is likely to be called? I. If the bond is called, the capital gains yield will remain the same but the current yield will be different. II. If the bond is called, the current yield and the capital gains yield will both be different. III. If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be…
Consider a newly issued 4-year, 3.11% annual-pay bond trading at par. The present values of each of the bond’s promised payments, discounted at 6.11%. Its Macaulay duration is closest to A. 3.625 years. B. 3.723 years. C. 3.811 years. D. 3.924 years.
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Please show working Please answer ALL OF QUESTIONS 1 AND 2 1. A 7% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 7.5219%.a. What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent.b. What is the bond's YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answers to two decimal places. 2. Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 18 years to maturity, and a 9% YTM. What is the bond's price? Round your answer to the nearest cent.
2. Dhofar company issued bonds with 500 $ face value and 10 percent annual coupon rate The current yield to maturity on this bond is 5 percent and maturity date in 6 years. The current market price is 626.89.Calculate the expected change in the bond price if the yield to maturity is expected to decrease by 0.12 percent and the modified duration of this bond is 4.69 .

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