14. Suppose you bought a 2-year 4% annual coupon bond, with face value equal to $1000, and a YTM of 4%. What is the price of the bond? A. 1000 B. 961.54 C. 924.56 D. 998.52 E. 875.44
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- Suppose that a one-year, risk-free, zero-coupon bond with a $100,000 face value has an market price of $96,618.36. If you purchased this bond and held it to maturity, what is the yield-to-maturity on your bond? (Hint: use 4 decimal places for your calculations.) A. 1.50% B. 2.49% C. 4.49% D. 5.20% E. None of the above. 2.14) Suppose you want to purchase a bond with a $1,000 par value maturing in 4 years with an 8% annual coupon interest rate, and has a market interest rate of 6%. What's the price or the value of this bond? Select one: O a. $9712 O b. $1,069.31 O . 927.66 O d. $1,000Suppose you want to purchase a bond with a $1,000 par value maturing in 4 years with an 8% annual coupon interest rate, and has a market interest rate of 6%. What’s the price or the value of this bond? Select one: a. $1,069.31 b. $1,000 c. $9712 d. 927.66
- 1. If you invest in a $1,000 bond and pay a price of $832, and the coupon rate on the bond is 4%, what is your “Current Yield” on your investment?:a. It is 4.81%. b. 5.67%c. 3.21%d. 4.29%What is the price of a zero coupon bond with a $1,000 face value, 10-year maturity, and annual compounding? The market rate on similar bonds is 8%. a. $ 463.193 b. $ 655.228 c. $934.516 d. $ 1000 I5. An annual bond has the following features: Face value $1,000 Maturity 17 years Coupon rate 10% Discount rate 12% a. What is the market value of the bond? b. If you bought the bond for $711.96, did you make a profit or a loss? c. Would you buy the bond if it is currently selling for $800.00?
- 3. Suppose you have invested in the bonds below (they are all semi-annual). You own $1 MM of par value of bond A, $1 MM of par value of bond B, and $2 MM of par of bond C. Find the D' and DV01 of your portfolio. FV Bond Maturity (Yrs) Coupon Rate YTM 2.3% 3.15% 4.05% 2.15% $100 4.85% $100 5.50% $1,000 A B 8 C 109. A 30-year coupon bond with 10% annual coupons and the yield to maturity is 5%. Assume that the face value is $1,000. What is the bond price? (Hint: use the financial calculator) A) $1,768.62 B) $1,000.00 C) $1,550.59 D) $1472.89 %1.What is the holding period yield for an investor who pays $1,145 for a bond with a $1,000 face value and a 5% coupon and sells the bond three years later for $1,420???? a. 5.00% b. 6.86% c. 11.52% d. 3.78%
- 9. Suppose the accrued interest on a 8%-coupon bond is $20. The clean price is $909.10. What is the invoice or dirty price?You purchased a coupon-bearing bond at $800 and resold it at $900 after exactly one year. If the coupon is $60 paid annually, what is the current yield of the bond? O A. 0.075 O B. 0.125 O C. 0.067 O D. 0.200B2. Corporate Bonds (Answer all parts of this question.) Suppose you have a 6% coupon bond that matures in 1 year from now. The principal is 1,000. The bond currently trades at 900. Assume that the risk-free rate is at 2%. (a) (b) (c) (d) (e) How large is the risk premium? How much would it cost you to insure this bond against default today? What is the expected cash flow Eo [CF₁]? What is the probability of default p? Show that the expected profit from selling insurance against default is 0.