A five-year, 4 percent Euroyen bond sells at par. A comparable risk five-year, 5.5percent yen/dollar dual-currency bond pays $833.44 at maturity. It sells for¥110,000. What is the implied ¥/$ exchange rate at maturity? Hint: The dual-currency bond pays 5.5 percent on a notional value of ¥100,000, whereas the parvalue of the bond is not necessarily equivalent to ¥100,000.

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Answered: A five-year, 4 percent Euroyen bond…

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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Suppose that a bond pays semiannual coupons in the sequence 25, 30, 25, 35, 25, 40, ..., 25, 85. If the redemption value is 2500 dollars and the yield rate is 8.6 percent convertible semiannually, what is the price of the bond? Answer= dollars.
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 8 percent, has a YTM of 6 percent, and has 18 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 6 percent, has a YTM of 8 percent, and also has 18 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Price of Bond X $ Price of Bond Y $ If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In eight years? In 13 years? In 17 years? In 18 years? (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16.) Price of bond Bond X Bond Y One year $ $ Eight years $ $ 13 years $ $ 17 years $ $ 18 years $ $
A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? Assume semiannual compounding. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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A bond has a semi-annual coupon payment of $32.4. What is the coupon RATE? Convert to a percent. Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. (NOTE: the coupon RATE is given annually, yet the coupon PAYMENT is semi-annual.) Answer:
An investor invested in a 4-years, 4 percent EuroLBP bond sells at par. A comparable risk 4 years, 5.5 percent LBP/dollar dual currency bond pays $666.66 at maturity per LBP1,000,000 of face value. It sells for 1,200,000. Required: Calculate the implied LBP/$ exchange rate at maturity.
A bond that pays interest semiannually has a coupon rate of 5.08 percent and a current yield of 5.37 percent. The par value is $1,000. What is the bond's price?
A BBB-rated corporate bond has a yield to maturity of 10.5%. A U.S. Treasury security has a yield to maturity of 9.0%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 9.9% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond? c. What is the credit spread on the BBB bonds?
Bond X is a premium bond making semiannual payments. The bond pays a coupon rate of 7 percent, has a YTM of 5 percent, and has 13 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a coupon rate of 5 percent, has a YTM of 7 percent, and also has 13 years to maturity. The bonds have a $1,000 par value. What is the price of each bond today? If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In four years? In nine years? In 11 years? In 13 years?
A BBB-rated corporate bond has a yield to maturity of 10.8%. A U.S. Treasury security has a yield to maturity of 9.5%. These yields are quoted as APRs with semiannual compounding. Both bonds pay semiannual coupons at an annual rate of 10.2% and have five years to maturity. a. What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price (expressed as a percentage of the face value) of the BBB-rated corporate bond? c. What is the credit spread on the BBB bonds? a. What is the price (expressed as a percentage of the face value) of the Treasury bond? The price of the Treasury security as a percentage of face value is $________________ (Round to two decimal places.)
All bonds considered below have a face value of $1000. The two-year zero-coupon bond is trading at $905.13 while the two-year bond with annual coupon rate 7% is trading at $1035.9. In the absence of arbitrage, what is the fair price of the one-year zero-coupon bond?

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