A bond with $40 coupons every 6 months is purchased at a discount to yield ją = 8%. If the absolute value of the write-up for the first year is $10, what is the purchase price of the bond? O A. $1250 B. S1500 C. $2500 D. $750

A bond with $40 coupons every 6 months is purchased at a discount to yield ją = 8%. If the absolute value of the write-up for the first year is $10, what is the purchase price of the bond? O A. $1250 B. S1500 C. $2500 D. $750

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 $40 coupons every 6 months is purchased at a discount to yield j2= 8%. If the absolute value of the write-up for the first
year is S10, what is the purchase price of the bond?
A. $1250
B. S1500
C. $2500
O D. S750
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Afive-yearbondhasa$10,000parvalueandpayssemi-annualcouponsof$1,000.The bond’s yield-to-maturity is 8%. 1.(a) How much would you be prepared to pay for the bond? 2.(b) What should the price of the bond be one year from now? 3.(c) If all happens as expected, what rate of return would an investor expect if they buy the bond today and sell it in one year?
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You have a 10-year bond, with $1,000 face value, 8.00% coupon rate, semiannual coupon payments, and yield to maturity of 7.50%. What is its price? O $663.58 O $1,034.74 $103.47 O $1,349.04
What is the return on a bond that was issued at 9% coupon rate, 10% YTM, for five years, Face value of $1000 if YTM changed from 10% to 12% after the receipt of the first coupon and the bond was sold (the bond was sold at the beginning of the second year? A) 11, 50% B. 6, 98% C. 8,23 % D. 11,00%
Question 1?
B
What must be the price of a $5,000 bond with a 6.5% coupon rate, semiannual coupons, and five years to maturity if it has a yield to maturity of 9% APR? ..... O A. $6,308 B. $3,604 C. $5,407 D. $4,505
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