A government bond pays coupons 11 times a year at an annual rate of 7.5%, has a face value of $1, 500, and matures in 11 years. If the current market interest rate is 8.6% compounded annually (i.e., this is an effective rate), 1. What is the periodic market interest rate? (i.e., the rate every 1 th of a year) 11 % (Give answer as a percentage to 6 decimal places) 2. What is the coupon amount paid each time? CAN (Give answer to 4 decimal places) 3. What is the current market price of the bond? EA W (Give answer to 4 decimal places)

A government bond pays coupons 11 times a year at an annual rate of 7.5%, has a face value of $1, 500, and matures in 11 years. If the current market interest rate is 8.6% compounded annually (i.e., this is an effective rate), 1. What is the periodic market interest rate? (i.e., the rate every 1 th of a year) 11 % (Give answer as a percentage to 6 decimal places) 2. What is the coupon amount paid each time? CAN (Give answer to 4 decimal places) 3. What is the current market price of the bond? EA W (Give answer to 4 decimal places)

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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Looking at the Treasury yield curve you see that the two-year Treasury bond is selling at an interest rate of 3.84 percent and the three-year Treasury bond sells at a rate of 3.97 percent. What is the implied one-year interest rate two years from now? (Enter the answer as a percentage accurate to two decimal places. Just enter a number - do not add a % symbol or any other punctuation.)
Bond A has the following terms: Coupon rate of interest (paid annually): 12 percent Principal: $1,000 Term to maturity: Ten years Bond B has the following terms: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: Ten years What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $ What will be the price of each bond if, after four years have elapsed, interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $ What will be the price of each bond if, after ten years have elapsed, interest rate is 9 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $
Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Consider a bond with a face value of $1,000. The coupon is paid semiannually and the market interest rate (effective annual interest rate) is 8 percent. How much would you pay for the bond if a. the coupon rate is 6 percent and the remaining time to maturity is 10 years?
Jennifer Davis is planning to buy 10-year zero-coupon bonds issued by the u.s. treasury. if these bonds have a face value of $1000 and are currently selling at $410.63, what is the effective annual yield? assume that interest compounds semiannually on similar coupon-paying bonds. round final answer to 2 decimal places.
Bond A has the following terms: Coupon rate of interest (paid annually): 12 percent Principal: $1,000 Term to maturity: Ten years Bond B has the following terms: Coupon rate of interest (paid annually): 6 percent Principal: $1,000 Term to maturity: Ten years What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $ What will be the price of each bond if, after three years have elapsed, interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $ What will be the price of each bond if, after ten years have elapsed, interest rate is 9 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.Price of bond A: $ Price of bond B: $
Consider a bond (with par value = $1,000) paying a coupon rate of 10% per year semiannually when the market interest rate is only 4% per half-year. The bond has three years until maturity. Required: a. Find the bond's price today and six months from now after the next coupon is paid. b. What is the total (6-month) rate of return on the bond? Complete this question by entering your answers in the tabs below. Required A Required B Find the bond's price today and six months from now after the next coupon is paid. Note: Round your answers to 2 decimal places. Current price Price after six months $ $ 1,052.42 1,044.52
A 10-year bond with a face value of $1,000 has a coupon rate of 9.0%, with semiannual payments. a. What is the coupon payment for this bond? b. Enter the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ every six months. (Round to the nearest cent.)
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) increase from 8 to 10 percent. a. What is the bond price at 8 percent? Bond price b. What is the bond price at 10 percent? Bond price c. What would be your percentage return on the investment if you bought when rates were 8 percent and sold when rates were 10 percent? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Return on investment % Loss
Suppose a firm is issuing bonds. Each bond has a face amount of $1,000, a stated rate of 8%, and a 10-year term. Coupon (interest) payments are made annually. When the bonds are issued, the market rate for similar bonds is 8%. After a year, the bond is selling for $1,015. What is the yield to maturity?

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