5) You purchase a 30 year bond with nominal semiannual coupon rate 7% and nominalsemiannual yield rate of 6% and face value of $1,000. If you sell the bond immediatelyafter receiving your 20th semiannual coupon payment for a price of $925, then find youractual semiannual nominal yield rate for the 10 year period, and find the buyer's semiannualnominal yield rate for the 20 year period.

Answered: 5) You purchase a 30 year bond with…

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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Calculate the YTM based on the information provided and explainthe difference between the Yield to Maturity rate and the originalcoupon rate. YTM Bond Details: A bond is currently selling for $850 with 15 years until it matures.The bond has a current coupon rate of 6% and makes paymentssemi-annually. You purchase the bond today 1/1/2023 as yoursettlement date and you are interested in knowing what the YTMwill be. **Note, when calculating the YTM the bond price (% of par)and face value (% of par) will not be percentages, please usenumbers for their respective section. The Yield Calculation is alreadybuilt into excel, all you have to do is type is =yield.
You plan to buy an 8% coupon 8-year maturity bond when market rate of return of similar bond is 10%. a) Calculate the proper price for this bond. b) TWO years later, the market rate has changed to 9% and the price of your bond has also changed accordingly. If you sell this bond at the market price, what is the ANNUAL rate of return from your investment in this bond? c) What will be your real rate of return over the two years if inflation rate is 3% in the first year and 5% in the second?
Find the price a purchaser should be willing to pay for the given bond. Assume that the coupon interest is paid twice a year. $19,000 bond with coupon rate 6% that matures in 4 years; current interest rate is 5% The purchaser should be willing to pay $ (Simplify your answer. Round to the nearest cent as needed.)
1)Your broker offers to sell for $1,157 a AAA-rated bond with a coupon rate of 7 percent and a maturity of six years. Given that the interest rate on comparable debt is 4 percent, calculate the bond's price. Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. 2)Is your broker fairly pricing the bond? 3)the bond should or should not be purchased?
b) suppose that the market interest rate is 5%. Calculate the present value of the following. Show how your answer is obtained. i）A coupon bond with an annual coupon payment of $135 and a face value of $1500 that matures in five years. ii) A discount bond with a face value of $5000 that matures in one years. iii) A fixed payment loan with annual payments of $163 that matures in three years.

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