A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 7.1% in early 2015. If that rate continues unchanged for the 3 years of the bond's duration, what is the APY (annual percentage yield) on a $10,000 bond? (Please answer in term of percentage, e.g: 2.5%, and round to 2 decimal places) Answer:

A saving bond earns a variable rate of interest that can change six months, with compounding done monthly. The initial rate was 7.1% in early 2015. If that rate continues unchanged for the 3 years of the bond's duration, what is the APY (annual percentage yield) on a $10,000 bond? (Please answer in term of percentage, e.g: 2.5%, and round to 2 decimal places) Answer:

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.4E

See similar textbooks

Similar questions

Calculate the value of a 2-year 3.5% annual pay bond given the interest rate below. What is the implied 3-year spot rate? Time Period Forward Rate z1 0.80% 1f1 1.12% 1f2 3.94% 1f3 3.28% 1f4 3.14%
Treasury Note Interest Rates 1 year interest rates 2-year interest rates 3-year interest rates 1.25% 2.00% 2.5% Suppose bond buyers think there is a 0.2% term premium on a two-year Treasury Note. Based on the liquidity premium theory formula, calculate today’s expectation of a 1-year interest rate, one year from now.
Hardev
According to the expectations theory of the term structure of interest, if the 1-year bond rate today is 6% p.a. and the 2-year bond rate today is 7% p.a., what is the 1-year bond rate next year? A. 6% B. 6.75% C. 7.5% D. 8%
Use the information in the table below for this question. All the interest rates are annual percentage rates (APRS). в Annual Yields U.S. Treasury Bonds as of October 23rd, 2018 A. Maturity I Month 3 Month Today 2.21% 4 2.33% 6 Month 2.48% 1 Year 2 Year 6. 2.67% 2.89% 8. 3 Year 2.95% Calculate the annual the forward rate of 3-month T-bills based on the 3-month and 6-month treasury yields. Which of the following Excel formulas is correct? (1+85)/(1+B4)-1 ((1+85)/(1+B4/2)-1) 2 ((1+B5/2)/(1+B4/4)-1)4 =((1+85/2)/(1+B4/4)-1)
need answer in step by step
Q.A $35,000, 5% bond that matures in 10 years has interest payable semiannually. If the quoted price is $36,500, what is the yield rate? Cannot use Excel or a financial calculator. Please show step by step work.
QUESTION 1 A Suppose you deposited the K 1000 in four payments of K250 each on 1st January of 2009, 2010, 2011 and 2012. How much would you have in your account on 1st January 2012 based on 8 percent annual compounding? B A government bond issued 5 years to maturity, a face value of K 1,000 and a coupon rate of 8% paid annually. Similar bonds have a yield of 8 percent. Suppose after one year the yield rises to 9% and interest is paid semi-annually, what would be the value of the bond Assume it is now 1st January 2008. On 1st January 2009, you will deposit K 1000 into a savings account that pays 8 percent If the bank compounds interest annually. How much will you have in your account on 1st January 2012 What would your 1st January 2012 balance be if the bank used quarterly compounding rather than annual compounding?
A6 Calculate the interest rate sensitivity (change in price with respect to the interest rate) of a 1 year and a 5 year bond paying coupons of 4% when the current interest rate is 2%.
a b and c please thank you
eBook The interest rate on one-year Treasury bonds is 2.0 percent, the rate on two-year T-bonds is 1.9 percent, and the rate on three-year T-bonds is 1.8 percent. Using the expectations theory, compute the expected one-year interest rate in the second year (Year 2 only). Round your answer to one decimal place. _____ % Using the expectations theory, compute the expected one-year interest rate in the third year (Year 3 only). Round your answer to one decimal place. _____ %
None