A 4-year government bond makes annual coupon payments of 5.9% and offers a yield of 3.9% annually compounded. Assume t value is $1,000. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Suppose that one year later the bond still yields 3.9%. What return has the bondholder earned over the 12-month period? b. Now suppose that the bond yields 2.9% at the end of the year. What return did the bondholder earn in this case? a. Rate of retur b. Rate of return 3.90 %

A 4-year government bond makes annual coupon payments of 5.9% and offers a yield of 3.9% annually compounded. Assume t value is $1,000. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Suppose that one year later the bond still yields 3.9%. What return has the bondholder earned over the 12-month period? b. Now suppose that the bond yields 2.9% at the end of the year. What return did the bondholder earn in this case? a. Rate of retur b. Rate of return 3.90 %

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 20 -year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is: a. $950 b. $1,000 c. $1,050 Repeat Problem 11 using the same data, but now assume that the bond makes its coupon payments annually. Why are the yields you compute lower in this case? Solve ex 12.
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:
. Bond Valuation. Consider a bond that matures in 3 years. The face value of this bond is $1000. The bond pays semi-annual coupons at a rate of 8%. (a) Calculate the price of this bond, assuming the yield to maturity is 8.5% (b) Suppose you hold this bond for two years and then sell it just after receiving a coupon payment. At the time of the sale, the yield to maturity has fallen to 7.8%. Calculate the price of the bond at the time of the sale. (c) What is your total dollar value and percent return over the holding period?
A twenty-year government bond with a face value of 120$ makes annual coupon payments of 1% and offers a yield of 8% annually compounded.Suppose that one year later the bond yields at 5%. Showing your calculations,a) What return has bondholders earned over the 12-month period? Instead, suppose now that one year later the bond yields at 5.5%.b) What return has bondholders earned over the 12-month period?
A twenty-year government bond with a face value of 120$ makes annual coupon payments of 8% and offers a yield of 3% annually compounded. Suppose that one year later the bond yields at 4%. a) Is it good or bad news for bondholders? Explain b) What return has bondholders earned over the 12-month period? Please provide the details of your calculations and discuss your results. Instead, suppose now that one year later the bond yields at 5.5%. c) Is it good or bad news for bondholders? Explain d) What return has bondholders earned over the 12-month period? Please provide the details of your calculations and discuss your results.
A bond that matures in 7.5 years and pays semi-annual payments of 20.1 is priced at 98.70. What is the coupon rate if the face value is, as always, 1,000? ( well explain all point of question with proper answer).
Consider a 30-year Bond with $1,000 face value, which offers 10% annual coupon, paid once a year.Assume that interest rates, hence YTM (Yield to Maturity) changed from 6% to 7%. What is the duration of the Bond in years? Enter your answer in the following format: 12.34Hint1: Answer is between 10.24 and 12.77Hint2: Duration = (new bond price - old bond price) * (-100) / old bond price
Baghiben
A bond pays a coupon of $35 semi-annually. The bond matures in 9 years and you will receive $1,000 at that time. If the required return is 9%, how much should you be willing to pay for the bond today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. Answer
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