Assume a par value of $1,000. Caspian Sea plans to issue a 10.00 year, semi-annual pay bond that has a coupon rate of 11.00%. If the yield to maturity for the bond is 11.0%, what will the price of the bond be? Answer format: Currency: Round to: 2 decimal places A bank offers 8.00% on salings accounts. What is the effective annual rate if interest is compounded monthly? Submit Answer format Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required Wit accept decimal format rounded to 6 decimal places 0092434) C not submitted Attempts Remaining: Infinity C not submitted Attempts Remaining Infinity

Assume a par value of $1,000. Caspian Sea plans to issue a 10.00 year, semi-annual pay bond that has a coupon rate of 11.00%. If the yield to maturity for the bond is 11.0%, what will the price of the bond be? Answer format: Currency: Round to: 2 decimal places A bank offers 8.00% on salings accounts. What is the effective annual rate if interest is compounded monthly? Submit Answer format Percentage Round to: 4 decimal places (Example: 9.2434%, % sign required Wit accept decimal format rounded to 6 decimal places 0092434) C not submitted Attempts Remaining: Infinity C not submitted Attempts Remaining Infinity

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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A bank holds a 10-year $2 million face value bond with a duration of 8 years. The current price = $950,000. Interest rates are expected to increase from 9% to 11% over next 3 months. Demonstrate how the bank can use a forward contract to hedge the interest rate risk.
A Treasury bill that settles on May 18, 2022, pays $100,000 on August 21, 2022. Assuming a discount rate of 5.23 percent, what are the price and bond equivalent yield? Use Excel to answer this question. Note: Round your price answer to 2 decimal places. Enter your yield answer as a percent rounded to 3 decimal places. Price Bond equivalent yield %
The yield to maturity on 1-year zero-coupon bonds is currently 5%; the YTM on 2-year zeros is 6%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 7.5%. The face value of the bond is $100. Required: a. At what price will the bond sell? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will the yield to maturity on the bond be? Note: Do not round intermediate calculations. Round your answer to 3 decimal places. c. If the expectations theory of the yield curve is correct, what is the market expectation of the price for which the bond will sell next year? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. d. Recalculate your answer to part (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Price b. Yield to…
IBM is considering having its German affiliate issue a 10-year, $100 million bond denominated in euros and pricedto yield 7.5%. Alternatively, IBM’s German unit can issuea dollar-denominated bond of the same size and maturityand carrying an interest rate of 6.7%.a. If the euro is forecast to depreciate by 1.7% annually, what is the expected dollar cost of the eurodenominated bond? How does this compare to the costof the dollar bond?b. At what rate of euro depreciation will the dollar cost ofthe euro-denominated bond equal the dollar cost of thedollar-denominated bond?c. Suppose IBM’s German unit faces a 35% corporate taxrate. What is the expected after-tax dollar cost of theeuro-denominated bond?
AT-bill with face value $10,000 and 87 days to maturity is selling at a bank discount ask yield of 3.4%. What is its bond equivalent yield? (Use 360 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) The answer is 3.43 %, show how to get this answer
You purchase a bond with a coupon rate of 8.9 percent, a par value of $1,000, semiannual coupons, and a clean price of $845. If the next coupon payment is due in four months, what is the invoice price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Invoice price
Consider the following $1,000 face value bond which makes semi- annual coupon payments, Bond Bank of Montreal Coupon rate 3% Price 108.19 Maturity June 1, 2030 Settlement Date January 3, 2019 What is the total price you would pay for this bond? Enter your answer rounded to two decimal places.
Give only typing answer with explanation and conclusion Consider an eight-month European put option on a Treasury bond that currently has 14.25 years to maturity. The current cash bond price is $910, the put exercise price is $900, and the volatility for the bond price is 10% per annum. A coupon of $35 will be paid by the bond in three months. The risk-free interest rate is 8% for all maturities up to one year. Use Black’s model to determine the price of the option.
Suppose you (U.S. investor) purchase a 5-year, AA-rated Euro bond for par that is paying an annual coupon at the rate equal to 8 percent. The bond has a face value of 1,000 Euros. The spot exchange rate at the time of purchase is USD1.15/EUR. At the end of the year 1, the bond is upgraded to AAA-rated and the yield changes to 7.5% per annum continuous compounding. In addition due to changes in macroeconomic environment, the exchange rate also changed to USD1.25/EUR. Assume that a U.S. investor holds this bond for one year and sells it in the market at the end of year 1. EUR is the abbreviation for Euro and USD is the abbreviation for U.S. dollar. What is the overall gain / loss in U.S. dollars for the U.S. investor at the end of year 1 (t = 1 year)? (Roundoff your answer to four decimal places, in order to get as accurate answer as possible on Canvas. If your answer is -$1.2345, loss of $1.2345, then type your answer as -1.2345.)
A T-bill with face value $10,000 and 82 days to maturity is selling at a bank discount ask yield of 2.9%. What is the price of the bond equivalent yield? Use 365 days per year.
Consider the following $1,000 face value bond which makes semi-annual coupon payments, Bond Coupon rate Price Maturity Settlement Date Bank of Montreal 3.5% 101.71 December 1, 2030 January 23, 2019 What is the total price you would pay for this bond? Enter your answer rounded to two decimal places. Number
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 6.5 percent paid annually. If the yield to maturity is 7.6 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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