A highly rated corporate bond with five years left until maturity was recently quoted as selling for 92.278. The bond's par value is $1,000, and its initial interest rate was 6.16 percent. If this bond pays interest every six months and it has been four months since interest was last paid, how much would you be required to pay for the bond? If this bond pays interest every six months, and it has been four months since interest was last paid, you would be required to pay $942.81. (Round to the nearest cent.)

A highly rated corporate bond with five years left until maturity was recently quoted as selling for 92.278. The bond's par value is $1,000, and its initial interest rate was 6.16 percent. If this bond pays interest every six months and it has been four months since interest was last paid, how much would you be required to pay for the bond? If this bond pays interest every six months, and it has been four months since interest was last paid, you would be required to pay $942.81. (Round to the nearest cent.)

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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The Wall Street journal reports that the current rate on 5-year treasury bonds is 2.85 percent and on 10-year bonds is 5.35 percent assume that the maturity risk premium is zero. Calculate the expected rate on a year treasury bond purchased 5 years from today
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An insurance company is analyzing two bonds and is using duration as the measure of interest rate risk. Both the bonds trade at a yield to maturity of 8 percent, have $10,000 par values, and have five years to maturity. The bonds differ only in the amount of annual coupon interest that they pay: 5 and 7 percent. What is the duration for each five-year bond?
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