A bond that pays interest annually has a 6 percent promised yield and a price of $1,025. Annual interestrates are now projected to fall 50 basis points. The bond's duration is six years. What is the predicted newbond price after the interest rate change? (Watch your rounding.)17Multiple ChoiceO $1,042.33$995.99$1,054.01$987.44None of these choices are correct.Mc

Bond Price = $1,025 Yield Rate = 6% or 0.06 Basis Point = (-) 0.5% or (-) 0.005 The calculation of…

Answered: A bond that pays interest annually has…

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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you You are considering a 15-year $1,000 un par value bund. Its coupon rate is 10% and interest is paid semiannually. If require on "effective" armual interest rate (not a nominal rate) of 9.2025%, how much should you be willing to for pay the bond? 97 clic ve! 62.211711 $801 200 Mon Noo Z 4
Bond J is a 7 percent coupon bond. Bond K is a 13 percent coupon bond. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 10 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? Please answer fast i give you upvote.
A 6.60 percent coupon bond with 15 years left to maturity is priced to offer a 5.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 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.) Total return S 10 47 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.) Total return
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Illustrate your answers by graphing bond prices versus time to LO 2 19. Interest Rate Risk Both Bond Bill and Bond Ted have 5.8 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 25 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Bill? Of Bond Ted? Both bonds have a par value of $1,000. If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Bill be then? Of Bond Ted? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term bonds?
9
Please Explain Step by Step Thank you! A bond pays $12,000 per year for the next 10 years. The bond costs $108,000 now. Inflation is expected to be 6 percent over the next 10 years. Answer parts (a) and (b). a. What is the current dollar internal rate of return? Use linear interpolation with x1=1.95% and x2=2.00% to find your answer. The current dollar internal rate of return is enter your response here percent. (Type an integer or decimal rounded to two decimal places as needed.) b. What is the real internal rate of return? The real internal rate of return is enter your response here percent. (Type an integer or decimal rounded to two decimal places as needed.)
Please answer a,b
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Calculate the price of a zero-coupon bond that matures in 21 years if the market interest rate is 4.4 percent. Assume semiannual compounding. Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Zero-coupon bond price: $___________

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