14. Bond P is a premium bond with a coupon rate of 10%. Bond D has a coupon rate of 4% and iscurrently selling at a discount. Both bonds.make annual payments, have a YTM of 7% and have10 years to maturity. What is the current yield for Bond P and Bond D respectively?O 7.0% and 7.0%8.26% and 5.07%O 10.15% and 4.62%9.15% and 6.38%O 8.77% and 5.93%O None of the above

Value of bond can be calculated using PV function in excel. PV (rate, nper, pmt, [Fv], [type]) Rate…

Answered: 14. Bond P is a premium 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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2. Suppose that a coupon bond with a par value and a maturity of 7 years is selling for $1040. The semi-annual coupon payments are $23. Find the yield to maturity of this bond.
2. A bond pays semi-annual coupons with c(2) = .085. Assume the face value equals $10,000 and matures in 4 years. The YTM of the bond is given as i(2) = .07. Construct the amortization table for this bond. 3. Calculate the price of the bond in problem #2 above at time t=1/2.
A bond has a par value of $100, a coupon rate of 10.75% and matures in 5 years. If interest is paid annually and the required rate of return is 10%, what is the price of bond? Use excel.
Find the value of a coupon 4 year maturity bond, whose face value will be paid in equal instalments. Assume that the market interest rate will be 13 %, in the first 2 years, and 15 % İn the 3rd. and 4th . years
Consider a semi-annual bond that has a par value of 100, a 15-year maturity, a 5% coupon rate. Monthly interest rate is 0.412%. Q) Suppose that the bond’s yield to maturity decreases to 3.5%. How much will the bond price increase by applying the duration rule?
The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is. known as the holding period yield (HPY). (Round the final answers to 2 decimal places.) a. Suppose that today you buy an 9.5% annual coupon bond for $ 1,210. The bond has 19 years to maturity. What rate of return do you expect to earn on your investment? Expected rate of return % b-1. Two years from now, the YTM on your bond has declined by 1%, and you decide to sell. What price will your bond sell for? (Omit $ sign in your response.) Bond price $ b-2. What is the HPY on your investment? HPY%
According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three-year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: Oa. 6.0% O b. 15.0% Oc. 5.0% O d. 4.0%
Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 11 percent, a YTM of 9 percent, and 15 years to maturity. Bond Y is a discount bond making semiannual payments, This bond has a coupon rate of 9 percent, a YTM of 11 percent, and also has 15 years to maturity. Both bonds have a par value of $1,000 a. What is the price of each bond today? b. If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? In 6 years? In 10 years? In 14 years? In 15 years? Note: For all requirements, do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Bond X Bond Y a. Price today b. Price in 1 year Price In 6 years Price in 10 years Price in 14 years Price in 15 years
5. A 5-year bond with a yield of 7% (continuously compounded) pays an 8% coupon at the end of each year. What is the bond's price? What is the bond's duration? Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield.
9. A bond has a time-to-maturity of 8 years, a coupon rate of 5%, is currently selling for $1021.35. What is the bond's yield if it pays interest annually? A. 4.6740%. B. 5.6874%. C. 3.2654%. D, 4.0258%.
H3. The face value of a bond is $1000. This bond has a coupon rate of 6% compounded semi-annually with a prevailing interest rate of 6.5% compounded semi-annually. If this is a 10-year bond, what is this bond valued at initially?
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14. Bond P is a premium bond with a coupon rate of 10%. Bond D has a coupon rate of 4% and is currently selling at a discount. Both bonds.make annual payments, have a YTM of 7% and have 10 years to maturity. What is the current yield for Bond P and Bond D respectively?