An investor is considering a 5-year bond with a face value of $1,000, a coupon rate of 5% paid annually, and a yield to maturity of 6%. What is the current market price of this bond?
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- Consider a coupon bond with a face value of $100, a coupon rate of 25%, a time-to-maturity of two years and a price of $121.97. What is its yield-to-maturity?(Use the quadratic formula)You are given the following information about the yield curve: the 1-, and 2-year yields are yl = 4.5% and y2 = 5.5%, respectively. A 2-year annual 5% coupon bond with a face value of $1,000 is currently selling for $1,000. Assume the first coupon will not be paid until one year from now. Is there an arbitrage opportunity and, if so, how would you exploit it (assume we cannot trade in fractions of a penny)? A. There is no arbitrage opportunity B. Yes: Buy the bond and fund this by shorting a $50 face value 1-year discount bond and a $1,050 face value 2-year discount bond C Yes: Buy the bond and fund this by shorting a $47.85 face value 1-year discount bond and a $943.38 face value 2-year discount bond D. Yes: Short the bond and buy a $50 face value 1-year discount bond and a $1,050 face value 2-year discount bond E. Yes: Short the bond and buy a $47.85 face value 1-vear discount bond and a $943.38 face value 2-year discount bondYou own a bond with an annual coupon rate of 5% maturing in two years and priced at 85%. Suppose that there is a 23% chance that at maturity the bond will default and you will receive only 45% of the promised payment. Assume a face value of $1,000. A. What is the bond’s promised yield to maturity?B.What is its expected yield (i.e., the possible yields weighted by their probabilities)?
- Assume that the yield curve is YT = 0.04 + 0.001 T. (a) What is the price of a par - $1,000 zero - coupon bond with a maturity of 10 years? (b) Suppose you buy this bond. If 1 year later the yield curve is YT = 0.042 + 0.001 T, then what will be the net return on the bond?You own a bond with an annual coupon rate of 5% maturing in two years and priced at 85%. Suppose that there is a 23% chance that at maturity the bond will default and you will receive only 45% of the promised payment. Assume a face value of $1,000.A. What is the bond’s promised yield to maturity?B. What is its expected yield (i.e., the possible yields weighted by their probabilities)Consider a 25-year coupon bond which has a face value of $500 and a 5% coupon rate. Its current price is $500. The interest on this bond is expected to go up from 5% to 10% next year. a) Calculate the current yield of this 25-year coupon bond. b) Using the coupon bond pricing formula, calculate the expected price at which this bond will be sold next year. c) Calculate the expected rate of return if you buy the bond today and sell it next year. d) Are you going to invest on this bond if your investment horizon is just one year? Explain why or why not.
- ??Assume a 1,000 face value bond with 20 years left until maturity. If the coupon rate is 10%, paid semi-annually, and the current yield is 8.85%, what should be the yield to maturity on this bond? Show your work. Please show how to solve using a financial calculator. p/y=2 FV=1,000 n=20*21. Suppose you purchase bond that has a coupon of $75, face value of S1,000, and current price of $1,100. What is your coupon rate? What is your current Save Answer yield? 2. Suppose you purchase a bond with a coupon of $50 for $1,010. You sell it one year later for $900. What rate of return did you carn?
- suppose that you have purchased a 3- year zero-coupon bond with face value of $1000 and a price $850. if you hold the bond to maturity, what is your annual return?Suppose you purchase bond that has a coupon of $75 face value of $1000 and current price of $1000 what is your coupon rate?what is your current yield?An investor is considering purchasing a bond with a 5.25 percent coupon interest rate, a par value of $1,000, and a market price of $926.31. The bond will mature in nine years. Based on this information, answer the following questions: a. What is the bond's current yield? b. What is the bond's approximate yield to maturity? c. What is the bond's yield to maturity using a financial calculator? ... a. The bond's current yield is 5.67%. (Round to two decimal places.) b. The bond's approximate yield to maturity is 6.30 %. (Round to two decimal places.) c. Using a financial calculator, the bond's yield to maturity is %. (Round to two decimal places.)