59.Assume that you just bought a 5-year bond that pays interest annually of $80 eachyear and will mature for $1,000. Also assume that you have been given the 1-year,implied forward rates for each of the next 5 years that are listed below. Given thisinformation, determine the yield-to-maturity for this bond.Year12345ABCDEB.C.D.E.rf6.00%7.00%8.00%7.00%6.00%6.79%7.01%6.62%7.20%7.43%

Yield to maturity of bond is rate of return realized on bond when bond is held till maturity and…

Assume that you just bought a 5-year bond that pays interest annually of $80 ead year and will mature for $1,000. Also assume that you have been given the 1-yea implied forward rates for each of the next 5 years that are listed below. Given this information, determine the yield-to-maturity for this bond. Year 1 2 3 4 5 rf 6.00% 7.00% 8.00% 7.00% 6.00%

Assume that you just bought a 5-year bond that pays interest annually of $80 ead year and will mature for $1,000. Also assume that you have been given the 1-yea implied forward rates for each of the next 5 years that are listed below. Given this information, determine the yield-to-maturity for this bond. Year 1 2 3 4 5 rf 6.00% 7.00% 8.00% 7.00% 6.00%

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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Bond A is a $1,000, 6% quarterly coupon bond with 5 years to maturity.(a) If you bought Bond A today at a yield (APR) of 8%, what is your purchase price? Is this apremium or discount bond? Why?)(b) One year later, Bond A's YTM (APR) has gone down to 6% and you sell it immediately afterreceiving the coupon.(i) What is the current yield? (ii) What is the capital gains yield? (iii) What is the one-year total rate of return (in APR) if the coupons are reinvested at 2%per quarter during the holding period? (iv) Can Bond A’s one-year total rate of return be determined correctly by simply adding upthe current yield and the capital gains yield? Explain your answer without calculations.(c) Consider two other bonds: Bond B and Bond C.Bond B: A $1,000, 7% quarterly coupon bond with 4 years to maturityBond C: A $1,000 zero coupon bond with 2 years to maturity(i) Without calculation, briefly explain which bond in the following pairs has higherinterest rate risk.1) Bond A vs. Bond B 2) Bond B vs.…
You purchase a 6% $1,000 bond with a term of 5 years and reinvest all interest payments. If interest rates rise to 9% after you purchase the bond, what is the return on your investment in the bond? Assume annual payments/compounding. 6.33% 6.69% 9.00% 6.45%
es Find the duration of a 6.6% coupon bond making semiannually coupon payments if it has three years until maturity and has a yield to maturity of 6.6%. What is the duration if the yield to maturity is 9.0%? Note: The face value of the bond is $1,000. Do not round intermediate calculations. Round your answers to 2 decimal places. 6.6% YTM 9% YTM Duration years years
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%
a. Assuming you purchased the bond for $350 what rate of return would you earn if you held the bond for 25 years until it matured with a value $1000? a. Rate of return____% b. Suppose under the terms of thebond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until the date. How much would the bond be worth at that time? b. Bond value_____ c. In 2024 instead of cashing in the bond for its then current value you decide to hold the bond until it mature in 2043. What annual rate of return will you earn over the last 19 years? c. Rate of return___%
Assume that you have two bond investments and the information follows: Bond A has a par value of $8,000, interest paid semi annual, maturity 2 years, stated interest rate is 6%. Bond B has a par value of $8,000, interest paid semi annual, maturity 10 years, stated interest rate is 6%. The interest rates are increasing to 7%. Assume that you can only sell one of the bonds, which bond will you sell before the interest rate changes to 7%? Explain and support your answer with a present value calculation.
Give me answer within 30 min I will give you immediately upvote ....
a. An 8 ½%, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 4%. Assuming annual interest payments, what should you pay for the bond? b. What should you pay if interest is paid semiannually? c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 4%? Explain the differences in prices changes for (3a) and (3c) in terms of maturity. d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM. е.

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