A bond has a face value of $25000 and pays an annual coupon rate of 5.2%. The bond is selling for $25000 now and is expected to be sold for $25080 one year from now. What is the bond's expected rate of return? Answer: %

A bond has a face value of $25000 and pays an annual coupon rate of 5.2%. The bond is selling for $25000 now and is expected to be sold for $25080 one year from now. What is the bond's expected rate of return? Answer: %

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 with a face value of $1000 and a coupon rate of 10% (paid semi-annually) matures in 10 years from now. The required return (YTM) is 5%. i) Is the bond sold at premium or at discount? Explain. ii) What is the current market price of the bond? iii) Suppose interest rates and the required return for the bond in part ii) change, so that the market price of this bond is now $980. What is the new yield to maturity of this bond? Did the YTM go up or down? Show proper steps of the proof
Suppose the real risk-free rate of interest is 2%. Inflation is expected to be 2% for 2 years and then 3% thereafter. The maturity risk premium is 0.2% (t). where t is the number of years until maturity. The default risk premium is 2%. The liquidity premium is 1%. What is the nominal interest rate on a 4 year bond? 9.1% 7.8% 7.1%
Suppose the continuous forward rate is r(t) = 0.04 + 0.001t when a 8 year zero coupon bond is purchased. Six months later the forward rate is r(t) = 0.03 + 0.0013t and bond is sold. What is the return?
A 6.70 percent coupon bond with 10 years left to maturity is priced to offer a 8.4 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? Change in bond price: $________
You have a risk-free bond with 2 years to maturity. The bond has a face value of $ 1000 and a coupon rate of 5%. The next coupon will be paid one year from now, and the bond pays annual coupons. a. What is the price of the bond? What is its own yield to maturity? Is it trading at a discount or at a premium? b. Suppose you buy the 2-year bond above, and you sell it after one year. What is the expected return on your investment?Kindly solve the question in 10 mins. It is urgent.
A 30-year maturity bond making annual coupon payments with a coupon rate of 11.00% has a ation of 13.50 years. The bond currently sells at a yield to maturity of 5.75%. Ducation a. Find the exact dollar price of the bond if its yield to maturity falls to 4.75%. What is the % change in price? b. Assume that you need to make a quick approximation using the duration rule. What is the % change in price as approximated by the duration rule when the yield to maturity falls to 4.75%? c. Does the duration-rule provide a good approximation of the % price change in this case? Why or why not?
1. Consider a real return bond with a face value of $15,000 and a coupon yield of 5.2%. What is the coupon payment after one year if the inflation rate is 6.8%? Select one: a) $817.44 b) $833.04 c) $825.24 d) $809.64 I
Consider a 30-year bond with a 10% coupon rate (annual payments) and a $100 face va the initial price of this bond if it has a 5% yield to maturity? If the yield to maturity is un will the price be immediately before and after the first coupon is paid?
A bond has 10 years until maturity, a coupon rate of 8.3%, and sells for $1,170. Interest is paid annually. ( Assume a face value of $1,000.) If the bond has a yield to maturity of 9.7% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. What will be the rate of return on the bond? 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. If the inflation rate during the year is 3%, what is the real rate of return on the bond? 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.
What is the price of a bond with a coupon rate of 4% making semi-annual payments with a face value of $1,000 that matures in 10 years when a. the YTM on the bond is 8.6%? B. the Y IM Is 6.6%? C. the YTM is 5.0%? d. What is the relationship between YTM and price?
1. You buy a 6 year bond with an annual 5% coupon at par value, $1000. If the yield to maturity at the end of the first year changes to 3% what is the end of the year value of the bond(after the coupon payment, remember: bond value does not include this coupon)? 2. Calculate the value of a 6 year 2% coupon bond with semiannual payments, 1000 par. Expected return is the risk free rate of 3%. 3. Price a 5 year 4% semiannual coupon bond if the yield to maturity is 6% (write the price as if par is 100, use 5 decimal places)
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.

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