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A: using excel rate function to calculate YTM of the bonds
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A certain bond has a current yield of 6.5% and a market price of $846.15. What is the bond’s coupon rate?
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- Assume that the risk-free rate (i.e., Rf) is 2.8%. If, for a particular company bond issue, the default risk premium (i.e., DP) is 3.1%, the maturity risk premium ( i.e., MP) is 0.9%, and the market risk premium ( i.e., MRP) for that company's stock is 12.9% what is the required rate of return for the company's fixed income securities ? Record your answer as a percent , rounded to one decimal place , but do not include a percent sign in your answer . For example , enter 0.1578658 = 15.78625% as 15.8 .For a bond that is currently selling for par value (i.e., $1000). which one of the following relationships is correct (note: assume that all factors, other than the one mentioned, remain constant)? O 1) if the coupon rate increases, the bond price will remain the same. 2) if the coupon rate increases, the bond price will decrease. 3) if the yield to maturity decreases, the bond price will decrease. O 4) if the term to maturity increases, the bond price will remain the same. O 5) if the yield to maturity increases, the bond price will remain the same.The following table summarizes the prices of various default-free zero-coupon bonds (expressed as a percentage of the face value): a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat?
- Explain what you see from the pricing calculations. How do the two bonds differ? Bond C Bond Price = PV(rate,nper,pmt,fv) Given: n = Period which takes values from 0 to the nth period = 0,1,2,3 & 4 Cn = Coupon payment in the nth period = 10%*$1,000 = $100 YTM = interest rate or required yield = 9.6% P = Par Value of the bond = $1,000 Bond Z Bond Price = PV(rate,nper,pmt,fv) Given: n = Period which takes values from 0 to the nth period = 0,1,2,3 & 4 Cn = Coupon payment in the nth period = 0%*$1,000 = $0.00 YTM = interest rate or required yield = 9.6% P = Par Value of the bond = $1,000 years Bond A Bond Z 4 $1,012.79 $693.04 3 $1,010.02 $759.57 2 $1,006.98 $832.49 1 $1,003.65 $912.41 0 $1,000.00 $1,000.00Consider a bond with a face value of $1000. An increase and decrease in 1 bp results in the price changing to 995.12707 and 996.09333, respectively. What is its PVBP?(7.4) A bond's yield to maturity should not be confused with its which is a bond's annual coupon divided by its price. Unless the market value of the bond is equal to its the yield to maturity is determined by using a(n) approach. greatesser) te interest rate risk. (7.5) A allows the company to repurchase or "call" part or all of the bond issue at stated prices over a specific period. The difference between the and the is the call premium. Call provisions are often not operative during the first ; during this period of prohibition, the part of a bond's life. This is a bond is said to be
- Which of the following statements is CORRECT? a. If a coupon bond is selling at par, its yield to maturity is equal to zero. b. If a coupon bond is selling at a discount, its price will continue to increase until it reaches its par value at maturity. c. If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond. d. If a bond's yield to maturity exceeds its annual coupon, then the bond will trade at a discount. e. If a coupon bond, is selling at a premium, its yield to maturity is equal to zero. ANSWER IS NOT CThe yield on a zero-coupon bond of maturity Tis equal to: the return on the bond each period, if the bond is held until maturity the expected return on the zero-coupon bond the forward rate for time T-1 the forward rate for time T the spot rate of interestA bond has a par value of $1,000, a current yield of 7.55 percent, and semiannual coupon payments. The bond is quoted at 99.61. What is the coupon rate of the bond? O Multiple Choice 7.55% 15.10% 8.46%
- A bond is currently selling for $880. This indicates that this bond is _____, and you would expect that the coupon rate would be _____ than the current market rate. Attractive; greater than Attractive; less than Unattractive; greater than Unattractive; less thanFor a $1 bond the coupon rate is 120% of the yield rate and the premium is p. For another $1 bond with the same number of coupons and the same yield rate, the coupon rate is 80% of the yield rate. Express the price of the second hond as a function of p. Price of the second bond = P.A bond's semi-annual coupon is $52.9. What is the coupon rate?
