2. On January 1, 2022, you bought a three-year, annual-pay coupon bond with a 6% coupon rate, $1000 face value, and yield to maturity of 6%. On January 1, 2023, you received the first coupon of the bond, and on January 1, 2024, you receive the second coupon. Immediately after receiving the second coupon, you sell the bond. Assume that yields on bonds of all maturities are equal to 4.5% on January 1, 2024. (a) What is the price you paid for the bond on January 1, 2022? (2 points) (b) What is the selling price of the bond on January 1, 2024? (2 points)

2. On January 1, 2022, you bought a three-year, annual-pay coupon bond with a 6% coupon rate, $1000 face value, and yield to maturity of 6%. On January 1, 2023, you received the first coupon of the bond, and on January 1, 2024, you receive the second coupon. Immediately after receiving the second coupon, you sell the bond. Assume that yields on bonds of all maturities are equal to 4.5% on January 1, 2024. (a) What is the price you paid for the bond on January 1, 2022? (2 points) (b) What is the selling price of the bond on January 1, 2024? (2 points)

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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Assume a bond that promises eight annual coupon payments of $70 and will repay its face value of $1000 at the end of the eight years. Assuming that you are offered the bond for a price of $1035.94, use detailed workings to compute the implied YTM
A bond that settles on June 7, 2022, matures on July 1, 2042, and may be called at any time after July 1, 2032, at a price of 185. The coupon rate on the bond is 6.6 percent and the price is 200.50. What are the yield to maturity and yield to call on this bond?
A $11,000 bond with a coupon rate of 5.35% is redeemable on July 01, 2031. It is purchased on February 10, 2025 when the yield rate is 5.85% compounded semi- annually. Please include a well-labelled timeline diagram. a. What is the purchase price of the bond? Round to the nearest cent b. What is the amount of discount or premium on the bond?
A Treasury bond that settles on May 18, 2019, matures on December 31, 2031. The coupon rate is 9.65 percent, and the quoted price is 106 12/32. What is the bond’s yield to maturity? Payments are semi-annually.
USE THE FOLLOWING INFORMATION FOR THE NEXT 3 QUESTIONS: Part 1 of 3: Assume that you purchase a 30-year $1,000 par value bond, with a 10% coupon, and a yield of 9%. Immediately after you purchase the bond, yields change to 7% and remain at that level to maturity. Assume that you hold the bond for 8 years and then sell it. Interest is paid annually. What is the price of the bond today? Group of answer choices A. $1,991.87 B. $1,538.14 C. $1.732.51 D. $1,102.74 E. $1,225.16
Assume you buy a five-year, $1,000 par value bond with a 6% coupon and a 7% yield. Immediately after you acquire the bond, the yield increases to 8% and remains there until maturity. Calculate the realised horizon yield on a bond that you intend to keep till maturity. Annual interest is paid.
Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 1.69% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j2 = 10.9% p.a. Assume that this corporate bond has a 6% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places. Answer a. $59.319 b. $81.541 c. $80.092 d. $53.631
A treasury bond that settles on August 10, 2019, matures on January 15, 2025. The coupon rate is 5.2 percent and the quoted price is 110 11/32. What is the bond's yield to maturity?
A bond issued on February 1, 2004 with face value of $18000 has semiannual coupons of 6%, and can be redeemed for par (face value) on February 1, 2025. What is the accrued interest and the market price (the “clean” price) of the bond on November 15, 2006, if the bond’s yield on that date is to be 8%? (use actual/actual for accrued interest).
An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond Y matures in 19 years, while Bond A matures in 1 year. 1. What will the value of the Bond Ybe if the going interest rate is 7%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond A at its maturity and that 19 more payments are to be made on Bond Y. Round your answers to the nearest cent.
Calculate the current price of a $1,000 par value bond that has acoupon rate of 8 percent, pays coupon interest annually, has 18years remaining to maturity, and has a current yield to maturity(discount rate) of 11 percent. (Round your answer to 2 decimalplaces and record without dollar sign or commas). Your Answer: Calculate the current price of a $1,000 par value bond that has a coupon rate of 18 percent, pays coupon interest annually, has 15 years remaining to maturity, and has a current yield to maturity (discount rate) of 9 percent. (Round your answer to 2 decimal places and record without dollar sign or commas). Your Answer:
You bought a newly issued 10-year, $1,000 par value, 5.50% coupon bond (with semiannual coupon payments) on May 1, 2023. You decided to check the value and yields on the bond annually, so that you can keep track of your wealth. Your first check was to be done on May 1, 2024. On April 15, 2024, the yield to maturity for the bond changed to 5.20%. For your two year anniversary of owning the bond (May 1, 2025), calculate the bond's total yield for the second year of ownership

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