A bond investor is analyzing the following annual coupon bonds: Issuing Company Annual Coupon Rate Johnson Incorporated 6% Smith, LLC 12% Irwin Corporation 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ($) A 1200 1100 1000 900 800 700 B 600 10 8 6 C 2 0 YEARS TO MATURITY

A bond investor is analyzing the following annual coupon bonds: Issuing Company Annual Coupon Rate Johnson Incorporated 6% Smith, LLC 12% Irwin Corporation 9% Each bond has 10 years until maturity and the same level of risk. Their yield to maturity (YTM) is 9%. Interest rates are assumed to remain constant over the next 10 years. BOND VALUE ($) A 1200 1100 1000 900 800 700 B 600 10 8 6 C 2 0 YEARS TO MATURITY

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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An investor considers the purchase of a 2-year bond with a 5% coupon rate, with interest paid annually. Assuming the sequence of spot rates shown below, the price of the bond is closest to: Time-to-Maturity Spot Rates 1 year 3% 2 years 4% A. $101.93 B. $102.85 C. $105.81 D. $103.85
Calculate the value of a bond that matures in 18years and has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 9 percent. Part 1 The value of the bond is $___________. (Round to the nearest cent.)
You need to know the yield to maturity on your company’s debt. The quoted bond price is 103.425, the stated coupon rate is 5.68% and coupons are paid semiannually. The bond matures in 10 years. Calculate the yield to maturity. a. 2.62 percent b. 5.24 percent c. 58.02 percent d. 29.01 percent
A Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the coupon every six months, at the end of each six month period. The price of the bond is $105. What is the yield of this bond? a. 3.65% b. 1.8% C. 1.7% d. 3.8%
A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 7%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places.) Bond Prices Bond Equivalent Annual Yield to Maturity Effective Annual Yield to Maturity $ % $ % % a. b. C. 940 1,000 1,040 % % %
An investor is interested in buying a corporate bond with a face value of $1,000, AA rating, and a 10-year maturity. The bond has an annual coupon of 3.00%, payable semiannually. What is the current price of the bond? see attached information
Ninja Company's bonds mature in 10 years, have a par value of $1,000, and make an annual coupon interest payment of $70. The market requires an interest rate of 7.5% on these bonds. What is the bond's price? Select one: a. $965.68 b. $918.26 c. $934.77 d. $922.42
Bond prices and maturity dates. Moore Company is about to issue a bond with annual coupon payments, an annual coupon rate of 5%, and a par value of $1,000. The yield to maturity for this bond is 6%. a. What is the price of the bond if it matures in 5, 10, 15, or 20 years? b. What do you notice about the price of the bond in relationship the maturity of the bond? a. What is the price of the bond if it matures in 5 years? $(Round to the nearest cent.) What is the price of the bond if it matures in 10 years? $(Round to the nearest cent.) What is the price of the bond if it matures in 15 years? $(Round to the nearest cent.) What is the price of the bond if it matures in 20 years? $ (Round to the nearest cent.) b. What do you notice about the price of the bond in relationship the maturity of the bond? (Select the best response.) O A. As the time to maturity increases, the price of the bond increases.
A bond has a 12% coupon rate. The coupon is paid semi-annually and the last coupon was paid 79 days ago. If the bond has a par value of $1,000, what is the accrued interest (assume a 364 day year)? Group of answer choices A. $20.44 B. $23.65 C. $26.04 D. $16.69 E. $22.49
Find the total return earned by the bond with the characteristics shown in the table. Face Value $14,000 Annual Interest Rate 6.09% Term to Maturity 4 months What is the total return earned by this bond? $ (Round to the nearest cent as needed.)
4. A 5-year bond (denote this as Bond A) with semiannual coupons has a face value of $1,000 and a coupon rate of 6%. The bond is redeemable at 125% of the face value at maturity, and is currently selling for $1,015. Assume the next coupon is due six months from now. (a) Using linear interpolation with end points being 9% and 10%, approximate the bond's effective annual yield. (b) Another 5-year bond (denote this as Bond B) pays annual coupons and has the same face value, coupon rate, redemption value and yield as Bond A. Which bond has a larger duration? Explain your answer.
Review the Bond Table below; all bonds have semi-annual payments. Security. Coupon Rate Face Value 0.00% $1,000 4.50% 5.00% 1-yr Treasury 5-yr Treasury 10-yr Treasury 5-yr Corporate (rated A) 10-year Corporate 8.40% (rated BBB) Multiple Choice O 4.80% O If a company wanted to issue a new Corporate Bond (10 years, A rating) for full price, what coupon rate would it have to offer? 6.90% 6.50% 7.75% 7.50% $1,000 $1,000 $1,000 None of the above $1,000 Price $ 965.90 $991.18 $976.94 $912.46 $1,044.66

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