A 6.60 percent coupon bond with 10 years left to maturity is priced to offer a 8.2 percent yield to maturity. You believe that in one year, the yield to maturity will be 8.0 percent. Assuming semiannual interest payments, what is the change in price the bond will experience in dollars? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Change in bond price

A 6.60 percent coupon bond with 10 years left to maturity is priced to offer a 8.2 percent yield to maturity. You believe that in one year, the yield to maturity will be 8.0 percent. Assuming semiannual interest payments, what is the change in price the bond will experience in dollars? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Change in bond price

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 bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? Assume semiannual compounding. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
A 6.25 percent coupon bond with 15 years left to maturity is priced to offer a yield to maturity of 7.5 percent. You believe that in one year, the yield to maturity will be 7.0 percent. Assuming semiannual interest payments, what is the change in price the bond will experience in dollars? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Suppose the current interest rate on a one-year bond is 2% and the current interest rate on a two-year bond is 4%. The term premium on a two-year bond is 1%. According to the expectations hypothesis, what interest rate should we expect on a one-year bond next year? Answer as a percentage to one decimal place and do not include symbols (e.g. $, %, commas) in your answer. Answer:
A bond has a Macaulay duration of 12.00 and is priced to yield 10.0%. If interest rates go up so that the yield goes to 10.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down to 9.5%, what will be the bond's percentage change in price? Comment on your findings.
Compute the price of a 6.1 percent coupon bond with 15 years left to maturity and a market interest rate of 9.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Is this a discount or premium bond?
Find the duration of a bond with a settlement date of May 27, 2023, and maturity date November 15, 2034. The coupon rate of the bond is 8.5%, and the bond pays coupons semiannually. The bond is selling at a bond-equivalent yield to maturity of 10.0%. Use Spreadsheet 16.2. (Do not round intermediate calculations. Round your answers to 4 decimal places.) Macaulay duration Modified duration
A 6.45 percent coupon bond with 24 years left to maturity is priced to offer a 5.7 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.2 percent. What would be the total return of the bond in dollars? (Assume interest payments are semiannual.) (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Answer is complete but not entirely correct. Total return $ 2.64 × What would be the total return of the bond in percent? (Assume interest payments are semiannual.) (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Answer is complete but not entirely correct. Total return 0.14%
A newly issued bond pays its coupons once a year. Its coupon rate is 4.3%, its maturity is 10 years, and its yield to maturity is 7.3%. Required: I am just seeking answer to "d" and "e". a. Find the holding-period return for a one-year investment period if the bond is selling at a yield to maturity of 6.3% by the end of the year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If you sell the bond after one year when its yield is 6.3%, what taxes will you owe if the tax rate on interest income is 40% and the tax rate on capital gains income is 30%? The bond is subject to original-issue-discount (OID) tax treatment. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. What is the after-tax holding-period return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Find the realized compound yield before taxes for a two-year holding period, assuming that (i) you sell the…
You buy a 20-year bond with a coupon rate of 9.6% that has a yield to maturity of 10,5% (Assume a face value of $1,000 and semiannual coupon payments) Six months later, the yield to maturity is 11,5%. What is your return over the 6 months? Note: Do not round mediate calculations. Enter your answer as a percent rounded to 2 decimal places, Negative amount should be indicated by a minus sign.
A bond with a maturity of 12 years sells for $1,068. If the coupon rate is 10.2 percent, what is the yield to maturity of the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
You buy a 20-year bond with a coupon rate of 9.2% that has a yield to maturity of 10.7%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 11.7%. What is your return over the 6 months? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
Use Macauly's Duration Price Approximation formula for this. Before a change in interest rates, your bond has the following characteristics: present value of $5,557.56, Duration of 3.69 years with market interest rates of 5%. Calculate the percentage change in the bond's price if market rates fall to 4.85%. Be sure to include the negative sign IF you think the price goes down. I

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