5. Bond valuation Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. Bond Bond A Bond B Discount Rate Bond Value Current Yield 6.00% 15.00% Bond C 17.20% There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete the following statements: A bond is referred to as a par bond when the coupon rate A bond is referred to as a discount bond when the coupon rate the required yield, and the market value the required yield, and the market value the par value. the par value. A bond is referred to as a premium bond when the coupon rate the required yield, and the market value the par value. If the market price of the bond is equal to the intrinsic value (the computed value), which bond listed is selling at par? Bond C Bond A Bond B

5. Bond valuation Roen is planning to invest in five-year, 15% annual coupon bonds with a face value of $1,000 each. Complete the table by calculating the value of each bond and the current yields at the various discount rates. Bond Bond A Bond B Discount Rate Bond Value Current Yield 6.00% 15.00% Bond C 17.20% There is a distinct relationship between the coupon rate, the discount rate, and a bond's price relative to its par value. Based on your preceding calculations, complete the following statements: A bond is referred to as a par bond when the coupon rate A bond is referred to as a discount bond when the coupon rate the required yield, and the market value the required yield, and the market value the par value. the par value. A bond is referred to as a premium bond when the coupon rate the required yield, and the market value the par value. If the market price of the bond is equal to the intrinsic value (the computed value), which bond listed is selling at par? Bond C Bond A Bond B

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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1 Given below is information about three RM10000 par value bonds, each of which pays coupon annually. The required rate of return on each bond is 12%. Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value. Bond 1 . 2 3 Coupon Rate (%) 10 12 14 Maturity (years) 5 10 15 b. Calculate the Yield to Maturity (YTM)/ RRR for the example given below Bond par value RM10000 Coupon Rate 10% every year Maturity period 10 years Market Value of bond RM11800.00
Also how would this look in excel using function
Consider the four bonds having annual payments as shown in the following table Year Bond A Bond B Bond C Bond D Year 1 100 50 0 0 + 1000 Year 2 100 50 0 0 Year 3 100+1000 50+ 1000 0 + 1000 0 (a) If each of the bonds is traded to produce a 15% yield, determine the price of each bond. (b) If Bond C is sold for $900, what is the yield to maturity? (c) What is the yield to maturity if Bond D is sold for $900?
Thebond shown in the following table pays interest annually. Par value Coupon interest rate Years to maturity Current value $1,000 8% 9 $700 a. Calculate the yield to maturity (YTM) for the bond. b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.
Q2. Duration and Convexity Bond A has face value at $1,000, coupon rate of 6% paid semi-annually, 5 years to maturity, and a yield to maturity of 7%. a. Using the bond pricing formula, calculate the price of the bond and duration. ABC b. Calculate the convexity of the bond. c. Using the calculations from above, what is the "approximated bond price change" using duration and convexity, if the interest rate increases by 1%? d. What is the actual change in the bond price if the interest rate increases by 1%? e. Based on c) and d) above, discuss the roles of duration and convexity in estimating the price change. Which risk measure plays a bigger role? f. Suppose you have two bonds with the same maturity date but one bond has a 10% coupon rate while the other has a 5% coupon rate. Which of these two bonds would have a higher duration?
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Consider a 25-year bond with a face value of $1,000 that has a coupon rate of 5.8%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ *** (Round to the nearest cent.)
Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.8%, with semiannual payments.
The following table summarizes prices of various default-free zero-coupon bonds ( $100 face value): Maturity (years) 1 2 3 4 5 {:[" Price (per "$100],[" face value) "]:} $96.33 $91.98 $87.41 $82.53 $77.41 a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward-sloping, downward-sloping, or flat? Note: Assume annual compounding. a. Compute the yield to maturity for each bond. The yield on the 1-year bond is %. (Round to two decimal places.) The yield on the 2-year bond is %. (Round to two decimal places.) The yield on the 3-year bond is %. (Round to two decimal places.) The yield on the 4-year bond is enter your response here%. (Round to two decimal places.) Part 5 The yield on the 5-year bond is enter your response here%. (Round to two decimal places.) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will…
Consider the following bonds: •Bond A: A 2-year zero-coupon bond with a face value of $100 and 6% YTM. •Bond B: A 2-year par-value bond with a face value of $100 and 6% coupon rate. *Bond C: A 2-year par-value bond with a face value of $100 and 7% coupon rate. Suppose the yield curve shifts upwards by one percent. Which bond among bonds A, B, and C will experience the largest percentage price change? Which will have the lowest percentage price change? O a. Bond A; Bond C O b. Bond A; Bond B O c. Bond B; Bond C O d. Bond C; Bond B
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.
Use the following table to find the bond value: a. Price the bonds from the above table with annual coupon payments. b. Price the bonds from the above table with semiannual coupon payments.

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