8. Calculate the following on a bond that has a $1,000 Par Value, matures in exactly one (1) year, has a Coupon Rate of 4.75% with Coupon Payments made annually, and current market value is $985.00; b. The Yield-to-Maturity (YTM)
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8. Calculate the following on a bond that has a $1,000 Par Value, matures in exactly one (1) year, has a Coupon Rate of 4.75% with Coupon Payments made annually, and current market value is $985.00; b. The Yield-to-Maturity (YTM)
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- (a) Compute the market price (Vb) of the following bonds: (6)$1,000 par value, 10-yr maturity, and 8% coupon rate that is paid semi-annually? Assume the yield to maturity of 12%.$1,000 par value, 10-yr maturity, and 6% coupon rate that is paid semi-annually? Assume the yield to maturity of 12%.$1,000 par value, 10-yr maturity, and 8% coupon rate that is paid semi-annually? Assume the yield to maturity of 6%.(b) Based on your answers comment on the relationship (what happens to one variable when the other goes up/down) of (a) price with yield to maturity and (b) price with coupon rate. (4)Suppose a 10-year, $ 1 comma 000 bond with an 8.1% coupon rate and semi - annual coupons is trading for a price of $1 comma 034.81. a. What is the bond's yield to maturity (expressed as an APR with semi - annual compounding)? b. If the bond's yield to maturity changes to 9.7% APR, what will the bond's price be?Prepare a duration table for a coupon bond using the following assumptions: a. $100,000 par value b. 7% coupon rate c. 10-year maturity d. Annual interest payments e. Discount rate of 12%
- Suppose a bond with a 12% coupon rate and semiannual coupons, has a face value of $1,000, 10 years to maturity and is selling for $1,197.93. Calculate: A. Current yield, and B. YTM if the price of the bond in one year is $2,014.83 STEPS MAY INCLUDE USE OF FINANCIAL CALCULATOR (BA 2 PLUS)Question 1. Duration and Banking Consider a 5-year bond with annual coupon payments. The bond has a face value (prin- cipal) of $100 and sells for $95. Its coupon rate is 3%. (The coupon rate is the ratio between the coupon value and the face value). The face value is paid at the maturity year in addition to the last coupon payment. 1. Calculate the bond's yield to maturity (YTM) and duration using its YTM. 2. Suppose the bond's YTM changes in the same way as a 5-year T-bill interest rate. Use the bond's modified duration to evaluate the relative change in the 5-year bond's value if the interest rate on 5-year T-bills falls by one basis point, that is, by 0.0001. This part was extracted from the balance sheet of the First Bank of Australia: Assets (Billion AUD) Bond 80 Liabilities (Billion AUD) Fixed-rate liabilities 60 where "Bond" here refers to the bond we specified above and the fixed-rate liabilities (banks future payment obligations) have an average duration of 4 years and YTM of…Suppose a 10-year, $1,000 bond with a 10% coupon rate and semiannual coupons is trading for a price of $957.81. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 8% APR, what will the bond's price be? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The YTM is _____________(Round to two decimal places.) b. If the bond's yield to maturity changes to 8% APR, what will the bond's price be? The price is $______________ (Round to the nearest cent.)
- Suppose a ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for $1,034.18. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.7% APR, what will be the bond's price?Suppose a 10-year, $1,000 bond with an 8.0% coupon rate and semi-annual coupons is trading for a price of $1,034.74. a. What is the bond's yield to maturity (expressed as an APR with semi-annual compounding)? b. If the bond's yield to maturity changes to 9.0% APR, what will the bond's price be? a. What is the bond's yield to maturity (expressed as an APR with semi-annual compounding)? The bond's yield to maturity is %. (Round to two decimal places.)What is the approximate yield to maturity (YTM) of a bond that is currently selling for $1,150 in the market place? The annual bond has 20 years remaining until maturity and pays a 14% coupon. (Assume annual interest payments and discounting.) Select one: a. 14% b. 6% c. 7% d. 12%
- Suppose a 10-year, $1,000 bond with a 8% coupon rate and semiannual coupons is trading for a price of $1,037.12. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9% APR, what will the bond's price be?Suppose a ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for $1,034.64. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.4% APR, what will be the bond's price?Suppose a 10-year, $1,000 bond with a coupon rate of 8.7% and semiannual coupons is trading for $ 1,034.28 a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b If the bond's yield to maturity changes to 9.9% APRwhat will be the bond's price?