A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%. a. Use a financial calculator or spreadsheet to find the price of the bond if its yield to maturity falls to 7%. b. What price would be predicted by the duration rule? c. What price would be predicted by the duration-with-convexity rule? d. What is the percent error for each rule? What do you conclude about the accuracy of the two rules? e. Repeat your analysis if the bonds yield to maturity increases to 9%. Are your conclusions about the accuracy of the two rules consistent with parts (a)(d)?

Suppose you are reviewing a sheet for a bond portfolio and see the following information. These bonds have a par value of 100 and make semiannual coupon payments. Bond Annual coupon rate Number of years Annual yield to maturity A B с 6% 8% 10% 2 3 5 5% 10% 8% What is the bond portfolio's yield to maturity based on the IRR calculation?

A newly issued bond with 1 year to maturity has a price of $1,000, which equals its face value. The coupon rate is 15% and the probability of default in 1 year is 35%. The bond’s payoff in default will be 65% of its face value. a. Calculate the bond’s expected return. b. Use a data table to show the expected return as a function of the recovery percentage and the price of the bond. Please show how you got part B using all functions.

Subject:- finance

The current zero-coupon yield curve for risk-free bonds is as follows: coupon, risk-free bond? . What is the price per $100 face value of a two-year, zero- The price per $100 face value of the two-year, zero-coupon, risk-free bond is $ (Round to the nearest cent.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) 1 2 3 YTM 4.95% 5.49% 5.76% 4 5.97% 5 6.09% Print Done -

The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.3 percent for $785. The bond has 8 years to maturity and a par value of $1,000. What rate of return do you expect to earn on your investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b-1. Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price will your bond sell for? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b-2. What is the HPY on your investment? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Rate of return b-1. Price b-2. Holding period…

An investor is considering purchasing a bond with a 7.827.82 percent coupon interest​ rate, a par value of ​$1 comma 0001,000​, and a market price of ​$1 comma 159.761,159.76. The bond will mature in nine years. Based on this​ information, answer the following​ questions: a. What is the​ bond's current​ yield? b. What is the​ bond's approximate yield to​ maturity? c. What is the​ bond's yield to maturity using a financial​ calculator? Question content area bottom Part 1 a. The​ bond's current yield is 6.746.74​%. ​ (Round to two decimal​ places.) Part 2 b. The​ bond's approximate yield to maturity is 5.65.6​%. ​ (Round to two decimal​ places.) Part 3 c. Using a financial​ calculator, the​ bond's yield to maturity is

Suppose you are given the following information about the default-free, coupon-paying yield curve: Maturity (years) Coupon rate (annual payment) YTM a. Use arbitrage to determine the yield to maturity of a two-year zero-coupon bond. b. What is the zero-coupon yield curve for years 1 through 4? Note: Assume annual compounding. a. Use arbitrage to determine the yield to maturity of a two-year zero-coupon bond. The yield to maturity of a two-year, zero-coupon bond is %. (Round to two decimal places.) b. What is the zero-coupon yield curve for years 1 through 4? The yield to maturity for the three-year and four-year zero-coupon bond is found in the same manner as the two-year zero-coupon bond. The yield to maturity on the three-year, zero-coupon bond is %. (Round to two decimal places.) %. (Round to two decimal places.) The yield to maturity on the four-year, zero-coupon bond is Which graph best depicts the yield curve of the zero-coupon bonds? (Select the best choice below.) O A. 8- 7- 6-…

The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy a bond with an annual coupon rate of 6 percent for $1,080. The bond has 13 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of $1,000. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b- Two years from now, the YTM on your bond has declined by 1 percent, and you 1. decide to sell. What price will your bond sell for? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b- What is the HPY on your investment? (Do not round intermediate calculations and 2. enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Expected rate of return b-1. Bond price b-2. HPY % %

Consider the zero coupon Treasury bond yield curve. Suppose a 1 year bond has a yield of 2.13%. The yield curve slopes downwards between maturities of 1 year and 3 years, and then slopes upwards. Which of the following must be true?   Group of answer choices   A) The yield of a zero coupon bond with maturity 5 years is higher than 2.13%.   B) A 1 year positive coupon bond must have a lower price than the zero coupon bond with the same maturity.   C) Bond purchasers believe the Fed will decrease rates in the short run, and then increase them in the long run.   D) The economy will be in a recession within 2 years.   E) C and D.