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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The balance sheet for Shankland Corporation follows: 000'009 $ 000006 Current assets Long-term assets (net) Total assets Current liabilities Long-term liabilities Total liabilities Common stock and retained earnings 000 0000 000 00 000 009' 000 006 Total liabilities and stockholders' equity 000'00s Required Compute the following. (Round "Ratios" to 1 decimal place.) Working capital Current ratio Debt-to-assets ratio Debt-to-equity ratio
P2. Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 6 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? What does this problem tell you about the interest rate risk of lower-coupon bonds?
9.) Consider the following information regarding a credit default swap that you want to buy. The default swap offers three years of coverage with the possible default occurring at the end of year one, year two or year three. The face value of the bond to bond to be covered is $1,000,000. The recovery rate for such bonds is 35%. The probability of default in any given year is 5%. The STRIP rates for one, two and three years are 1%, 2% and 3% respectively. credit default swap? How much would you pay for this
Please explain why B is the correct answer. Will rate for the correct explaintion
Consider two bonds, S and T. Both bonds presently are selling at their par value of $100. Bond S will mature in 5 years whereas Bond T will mature in 6 years. If interest rates change such that the yield to maturity on both bonds goes from 6% to 8%, then ____________. Group of answer choices A) Both bonds will decrease in value but bond T will decrease more than bond S B) Both bonds will decrease in value but bond S will decrease more than bond T C) Both bonds will increase in value but bond S will increase more than bond T D) Both bonds will increase in value but bond T will increase more than bond S
2:36 a. The value of this bond if it paid interest annually would be $ (Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 15 years 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 17 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? ||| = Vol) 1 LTE2 O 4Gl 41% (Round to the nearest cent.)
Calculate the price of a zero-coupon bond that matures in 12 years if the market interest rate is 5.65 percent. Assume semiannual compounding. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Zero-coupon bond price : ________.__
An investor wants to find the duration of a(n) 10-year, 6% semiannual pay, noncallable bond that's currently priced in the market at $541.25, to yield 15%. Using a 250 basis point change in yield, find the effective duration of this bond (Hint: use Equation 11.11). The new price of the bond if the market interest rate decreases by 250 basis points (or 2.5%) is $ (Round to the nearest cent.)
How do I go about solving this
The current interest rate on a 10-year coupon bond with face value = $1,000 and annual coupon rate = 3.25% is 2.42%. This implies This implies: (there are more than one answer) Question 26 options: the price of this bond is $1,000. the price of this bond is greater than $1,000. the price of this bond is less than $1,000. the buyer of the bond will receive $24.2 payment from the bond issuer every year before maturity while holding the bond. the buyer of the bond will receive $32.5 payment from the bond issuer every year before maturity while holding the bond.
Suppose the interest rate on a 1-year T-bond is 2.60% and that on a 2-year T-bond is 4.50%. Assume that the pure expectations theory is NOT valid, and the MRP is zero for a 1-year T-bond but 0.30% for a 2-year bond. What is the equilibrium market forecast for 1-year rates 1 year from now? a. 4.7333% b. 5.1110% c. 5.2676% d. 5.5463% e. 5.8250%. Only typing answer Please explain step by step
A bond's modified duration is 7.5 years, its current yield-to-maturity is 6%, and its price is $950. Approximately what will be the price of the bond if the yield-to-maturity increases to 6.5%? 879 893 941 914 Not enough information

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