4. WAY Co., issued a 5-year bondwith a face value of P50,000 with acoupon rate of 8% annually and ayield to maturity of 12%. The bond'sconvexity would be closest to:О а. 14.91О ъ. 19.67c. 20.84O d. 17.62е. 19.20

Convexity of a bond is determined using the below formula: Convexity=∑t=1nCFt1+yt×t2+tP×1+y2 Here, n…

Answered: 4. WAY Co., issued a 5-year 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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SAM Co., issued a 10 year bond with a face value of ₱50,000 with a coupon rate of 10% that will be paid semiannually. The bond is callable at year 5 at 98. Currently the bond is quoted at 85. Theapproximate yield to call would be closest to:a. 8.31% b. 6.89% c. 13.77%d. 17.03% e. 1.71% f. 7.69%
A bond with $898,000 face value that pays 10% coupon is issued at 102 1/2, i.e., 102.5% of its face value. Is this bond issues at premium of discount? And what is the amount of cash received as a result of issuing this bond? a. Premium; $920,450 b. Discount; $673,500 c. Premium; $987,800 d. PAR Value; $898,000 A B C D
The Sisyphean Company has a bond outstanding with a face value of $1,000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 9.5% and that the coupon payments are to be made semannually.Assuming the appropriate YTM on the Sisyphean bond is 7.4%, then this bond will trede at A a premium. B. par c. a discount. D. none of the above
SBM., issued a 5-year bond with a face value of ₱10,000 with a coupon rate of 9%. The bond can be redeemed at year 3 at 101. Currently, the bond is quoted 95 1⁄2. The approximate yield to call wouldbe closest to: a. 9.50% b. 3.67% c. 9.28%d. 10.27% e. 18.75% f. 11.03%
A6)
2
A bond of Akshita Ltd has a yield of 10% if held till maturity. If it has a duration of 4.28 years, the modified duration of this bond would be O a. 3.89% O b. 4.25% O c. 4.89% O d. 3.25%
2:37 Vo) 1 LTE2 ا... 46 ... 22 ] (Related to Checkpoint 9.2) (Yield to maturity) The Saleemi Corporation's $1,000 bonds pay 6 percent interest annually and have 12 years until maturity. You can purchase the bond for $1,055. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 4 percent? ||| a. The yield to maturity on the Saleemi bonds is %. (Round to two decimal places.) = O 41%
A3)
2. Bond A B C D A commercial bank has the following bond investments: Face Value 1,500,000 2,250,000 1,050,000 2,425,000 Bond Price 98.65 101.45 96.55 94.56 Remaining Life (in Yrs) 2.35 3.24 4.01 4.17 Modified Duration 3.25 3.78 4.23 5.04 Convexity 22.56 29.76 34.56 55.67 a. What is the overall market value of the bond investments? b. Determine the average modified duration and convexity of the bond investment. c. By how much will the overall value of the bond investments change if yields went up by 0.25%?
K (Related to Checkpoint 9.2 and Checkpoint 9.3) (Bond valuation relationships) The 12-year, $1,000 par value bonds of Waco Industries pay 11 percent interest annually. The market price of the bond is $925, and the market's required yield to maturity on a comparable-risk bond is 14 percent. a. Compute the bond's yield to maturity. b. Determine the value of the bond to you given the market's required yield to maturity on a comparable-risk bond. c. Should you purchase the bond? a. What is your yield to maturity on the Waco bonds given the current market price of the bonds? % (Round to two decimal places.)
Ch. 8. Calculating Yield to Market. Flowerpot Corp. has a bond outstanding with a coupon rate of 5.5 percent and annual payments. The bond currently sells for $919.81, matures in 11 years, and has a par value of $1,000. What is the YTM of the bond? Format as a percentage and round to two places past the decimal point as "X.XX"

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4. WAY Co., issued a 5-year bond with a face value of P50,000 with a coupon rate of 8% annually and a yield to maturity of 12%. The bond's convexity would be closest to: O a. 14.91 О Б. 19.67 О с. 20.84 O d. 17.62 Ое. 19.20