23. Non-callable bonds currently sells for 755.90. they have a 10-year maturity with yield to maturity of 14%. What is the company’s coupon rate?
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23. Non-callable bonds currently sells for 755.90. they have a 10-year maturity with yield to maturity of 14%. What is the company’s coupon rate?
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- What would the excel imput be?The yield to maturity (YTM) on 1-year zero-coupon bonds is 5%, and the YTM on 2-year zeros is 6%. The YTM on 2-year-maturity coupon bonds with coupon rates of 12% (paid annually) is 5.8%.a. What arbitrage opportunity is available for an investment banking firm?b. What is the profit on the activity?4. The bonds of CEPS Group sells for OMR 1,191.53. The yield to maturity is 12 percent and the maturity date is 9 years from today. What is the annual coupon rate of this bond if the face value is $1,000?
- 13. Consider otherwise comparable 1 year and 2 year zero-coupon bonds. Both bonds have a face value of $1000. a. If newly issued 1 year bonds are selling for $957 today and newly issued 2 year bonds are selling for $907 today, what are their current yields to maturity? b. Based on the Expectations Theory of Term Structure, what yield to maturity do investors expect next year's 1 year bonds to earn (i.e. - what is i₁)? Explain. C. Given your answer to b, at what price do investors expect they will be able to sell this year's 2-year bonds next year (when they will have 1 year left to maturity)? d. Use your answer to c, to compute the current expected 1 year holding period rate of return for newly issued 2 year zero coupon bonds. Is the expected holding period rate of return consistent with the Expectations Theory of Term Structure? ExplainSuppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Price $983.78 865.89 797.92 732.00 660.24 Required: a. Calculate the forward rate of interest for each year. b. How could you construct a 1-year forward loan beginning in year 3? c. How could you construct a 1-year forward loan beginning in year 4?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.
- 4. The bonds of CEPS Group sells for OMR 896.67. The yield to maturity is 11 percent and thematurity date is 10 years from today. What is the annual coupon rate of this bond if the facevalue is $1,000?4. What is the semi-annual coupon bond’s nominal yield to maturity (YTM), if the years to maturity is 15 years, and sells for 105% with coupons rate of 10%? Assume the par value of the bond is $1,000.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.
- 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?2. Consider a bond with a 7.5% annual coupon rate and a face value of $1,000. Calculate the bond price and duration & show your work. Years to Maturity Interest rate Bond Price Duration 4 6. 6. 9. What relationship do you observe between yield to maturity and the current market value? What is the relationship between YTM and duration?1. (Calculating the present value of a bond) If a corporate bond with a face value of $1,000 has 24 years to go until it matures, has a coupon interest rate of 5.7% and a yield to maturity (YTM) of 4.201%, what should be its price in the bond market (i.e., PV)?