The following table gives the prices of bondsBond Principal ($) Time to maturityAnnual coupon ($) Bond Price ($)100(years)0.510011001001.52The bonds provide coupon are semiannual coupon bonda. Calculate 6-month, 12-month, 18-month and 24-month zero rates.1567098100100101b. What is the forward rate for the six-month period beginning in 12 months.c. Estimate the price of a two-year bond providing annual coupon of 7% annually.

A bond is a debt security.Usually issued by the Government and the companies to raise debt.In this…

Annual coupon ($) Bond Price ($) 0 The following table gives the prices of bonds Bond Principal ($) Time to maturity 100 (years) 0.5 100 1 100 100 5 6 7 1.5 2 The bonds provide coupon are semiannual coupon bond 98 100 100 101 a. Calculate 6-month, 12-month, 18-month and 24-month zero rates. b. What is the forward rate for the six-month period beginning in 12 months. c. Estimate the price of a two-year bond providing annual coupon of 7% annually.

Annual coupon ($) Bond Price ($) 0 The following table gives the prices of bonds Bond Principal ($) Time to maturity 100 (years) 0.5 100 1 100 100 5 6 7 1.5 2 The bonds provide coupon are semiannual coupon bond 98 100 100 101 a. Calculate 6-month, 12-month, 18-month and 24-month zero rates. b. What is the forward rate for the six-month period beginning in 12 months. c. Estimate the price of a two-year bond providing annual coupon of 7% annually.

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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Consider the following two Treasury securities: Bond Price Modified duration (years) A $100 6 B $80 7 For a 25 basis-point change in interest rates, which bond has the greatest percentage change in price? A. Bond A B. Bond B C. Can't be determined
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bond contract rate =7% semi- anual bond -$10,000 bond market =6% semi annual bond life = 10 years 1) find the selling price of this bond 2) will it be sold at a discount or premium 3) do the journal entry for the issuance 4) calculate the discount/premium authorization per period (use the slightline method ) 5) do the entry for the payment of cash interest period 6) do the entry for the amortization of the discount /premium per period 7)find total interest expense per period 8) show the balance sheet presentation of the bond after two periods have elapsed
The $1,000 face value 7% coupon bond pays interest semi-annually. The bond will mature in 5-years. Find the Modified duration of the bond if it sells for $1,025.30. (A) 4.54-years (B) 4.18-years (C) 4.40-years (D) 5.00-years
The $1,000 face value 7% coupon bond pays interest semi-annually. The bond will mature in 5-years. Find the Modified duration of the bond if it sells for $1,025.30. (A) 4.54-years (B) 4.18-years (C) 4.40-years (D) 5.00-years
Referring to the table below is the information about three RM1000 par value bonds and each of which pays coupon semiannually. The required rate of return on each bond is 12%. Calculate the value of the bonds and determine whether the bond is selling at discount, premium or par value. Bond Coupon Rate (%) Maturity (years) 1 10 5 2 12 10 3 14 15
Bond Principal ($) Time to Maturity (yrs) 100 0.5 100 1.0 100 1.5 100 2.0 *Half the stated coupon is paid every six months Annual Coupon ($)* 0.0 0.0 6.2 8.0 Bond Price ($) 98 95 101 100 Calculate the 2-year par yield. Enter your answer rounded to four decimal places, skip the % sign. For example, if your calculation results in 0.1234567 %, you only need to enter 0.1235.
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Question 4: Adani ltd. issued a bond having the maturity of five years with a face value of Rs. 800 and agreed coupon rate 10%. Assume the interest rate (yield to maturity) is 8%. The coupon payment is made half-yearly.1. Calculate the price of the bond.2. Calculate the duration of the bond.3. Calculate the modified duration of the bond.4. If the interest rate goes to 8.20 %, what is the new price of the bond?5. If the interest rate goes down by 0.30%, what is the new price of the bond? Excel Required !!
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