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Q: Suppose a 10-year, $1,000 bond with a coupon rate of 8.7% and semiannual coupons is trading for…
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Q: Suppose a 10-year, $1000 bond with a coupon rate of 8.4% and semiannual coupons is trading for…
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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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- EXAMPLE: The Ford Motor Company bond has a coupon interest rate of 7.450%, and the closing price of the bond is 81.438. Find the current yield. SOLUTION:Suppose a 10-year, $1,000 bond with a coupon rate of 8.8% and semiannual coupons is trading for $1,034.19. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.9% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is ☐ %. (Round to two decimal places.)The bond's annual coupon rate divided by its market price is referred to as the Multiple Choice yield to call. yield to maturity. current yield. term structure of interest rates.
- Suppose a seven-year, $1,000 bond with a coupon rate of 7.8% and semiannual coupons is trading with a yield to maturity of 6.34%. a. Is this bond currently trading at a discount, at par, or at a premium? Explain. b. If the yield to maturity of the bond rises to 7.34% (APR with semiannual compounding), what price will the bond trade for? a. Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best choice below.) OA. Because the yield to maturity is greater than the coupon rate, the bond is trading at a premium. O B. OC. Because the yield to maturity is less than the coupon rate, the bond is trading at a discount. Because the yield to maturity is greater than the coupon rate, the bond is trading at par. O D. Because the yield to maturity is less than the coupon rate, the bond is trading at a premium.A bond sells for $1000 and has a coupon rate of 9.04%. What is the bond's yield?If the current yield of a bond goes down from 6.1% to 4.5%, by what percent does the market price increase?
- A newly issued bond with 1 year to maturity has a price of $1,000, which equals its face value. The coupon rate is 15% and the probability of default in 1 year is 35%. The bond’s payoff in default will be 65% of its face value. a. Calculate the bond’s expected return. b. Use a data table to show the expected return as a function of the recovery percentage and the price of the bond. Please show how you got part B using all functions.Bond A has a coupon rate of 4% and a yield of 3%. Bond B has a coupon rate of 3% and a yield of 4%. Which bond has the lower price? A BSuppose a ten-year, $1,000 bond with an 8.4% coupon rate and semiannual coupons is trading for $1,035.65. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.9% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is%. (Round to two decimal places.)
- Yield to maturity The relationship between a bond's yield to maturity and coupon interest rate can be used to predict its pricing level. For the bond listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par. Coupon interest rate Yield to maturity 10% 8% What is the price of the bond in relation to its par value? (Select the best answer below.) O A. The bond sells at a discount to par. OB. The bond sells at par. OC. The bond sells at a premium to par.Excel Activity: Bond Valuation Clifford Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds: • Bond A has a 10% annual coupon, matures in 12 years, and has a $1,000 face value. • Bond B has an 8% annual coupon, matures in 12 years, and has a $1,000 face value. • Bond C has a 12% annual coupon, matures in 12 years, and has a $1,000 face value. Each bond has a yield to maturity of 10%.the current yield of a bond goes down from 6.2% to 4.9%, what percent does the market price increase?