A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of: A Two $500 zero coupon bonds maturing in 2 years B One $1,000 zero coupon bond maturing in 2 years One $1,060 zero coupon bond maturing in 2 year plus three $60 zeros with maturities at ½, 1, and 1½ years One $1,060 zero coupon bond maturing in 1 year plus four $60 zeros maturing on ½, 1, 1½, and 2 years E No, the arbitrage principle ensures that the market is in equilibrium

A 2-year $1,000 bond pays $60 semi-annual coupons. This bond can be replicated as a portfolio consisting of: A Two $500 zero coupon bonds maturing in 2 years B One $1,000 zero coupon bond maturing in 2 years One $1,060 zero coupon bond maturing in 2 year plus three $60 zeros with maturities at ½, 1, and 1½ years One $1,060 zero coupon bond maturing in 1 year plus four $60 zeros maturing on ½, 1, 1½, and 2 years E No, the arbitrage principle ensures that the market is in equilibrium

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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A $1,000 bond has a coupon of 4 percent and matures after tên years. ASsume that the bond pays interest annually. a. What would be the bond's price if comparable debt yields 6 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. What would be the price if comparable debt yields 6 percent and the bond matures after five years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. c. Why are the prices different in a and b? The price of the bond in a is -Select- v than the price of the bond in b as the principal payment of the bond in a is -Select- v than the principal payment of the bond in b (in time). d. What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after ten years: CY: % YTM: % The bond matures after five years: CY: YTM:
A 8% coupon bond has a par value of $1,000 and a yield-to-maturity of 8%. You purchase the bond when it has exactly 12 years remaining until maturity. You hold the bond for 6 months, collect the coupon payment, and then sell the bond immediately. If the bond's yield-to-maturity is 4% when you sell it, what is your percentage return over this 6-month holding period? Enter your answer as a decimal and show 4 decimal places. For example, if your answer is 6.25%, enter .0625.
You are given the following information aboutr a 20 year bond with face amount 4000. The bond has an anual coupon rate of 8% paid semiannually. the purchase price results is an annual nominal yield rate to the investor of 5.6% convertible semiannually. the amount for amortization of premium in the sixth coupon payment is 32. Calculate the redemption value of the bond.
A 10%, 25 year bond with a par value of $1,000 pays on an annual basis has a current call feature amounting to 1,300 within 5 years. 1. What is the YTM of the bond if the current price of the bond is $1,100?(Answer with % in two decimal places. Ex. 1.23%) 2. What is the YTC of the bond if the current price of the bond is $1,100?(Answer with % in two decimal places. Ex. 1.23%)
A $1,000 bond has a coupon of 8 percent and matures after eight years. Assume that the bond pays interest annually. What would be the bond's price if comparable debt yields 10 percent? Use Appendix B andAppendix D to answer the question. Round your answer to the nearest dollar. $ What would be the price if comparable debt yields 10 percent and the bond matures after four years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Why are the prices different in a and b?The price of the bond in a is -Select-lessgreaterItem 3 than the price of the bond in b as the principal payment of the bond in a is -Select-further outcloserItem 4 than the principal payment of the bond in b (in time). What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after eight years: CY: %YTM: % The bond matures after four years: CY: %YTM: %
A bond is currently selling for $1040. It pays the amounts listed in the picture at the ends of the next six years. The yield of the bond is the interest rate that would make the NPV of the bond’s payments equal to the bond’s price. Use Excel’s Goal Seek tool to find the yield of the bond.
A $1000 bond with semi-annual coupons is redeemable at 103 in 5 years. The absolute value of the write down (book value adjustment) in the first coupon is $3.99 and the absolute value of the write down (book value adjustment) in the 5th coupon is $4.85. What is the price of the bond?
A 15-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 6%. Required: a. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.) b. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,000. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,040. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
A 10-year bond with a $1,000 face value has a coupon rate of 8 percentpaid semiannually. If current interest rates are 7 percent for bonds of asimilar nature, calculate the price of the bond.
A three-year, 1000 dollars, 6 percent bond with semiannual coupons has redemption amount 1,040 dollars. Make amortization tables for this bond if it is bought to yield a nominal rate of 4 percent convertible semiannually.

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