price since the bond is trading at a premiumAssume you purchase a bond from Texas Republic and it has 8 years remaining until maturity and that you will not sell itprior to maturity. Further, when you purchased the hond, it was priced at $875.80 The hond has an annual coupon rate of4%. What is the bone's yield to maturity?A. 6%B. 2%C. 4%D. 9%E. 8%Cumently investors demandochod 30%6 Based on this information what

Yield to maturity can be calculated by following function in excel=RATE (nper, pmt, pv, [fv],…

Assume you purchase a band from Texas Republic and it has 8 yours remaining uncil caturity and that you will not sell i prior to maturity. Further, when you purchased the hend, it was priced at $825.80 The hond has an annual coupon rate of 4%. What is the bond's yield to maturity? A. 6

Assume you purchase a band from Texas Republic and it has 8 yours remaining uncil caturity and that you will not sell i prior to maturity. Further, when you purchased the hend, it was priced at $825.80 The hond has an annual coupon rate of 4%. What is the bond's yield to maturity? A. 6

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. You purchased a new issue GE Corp bond. The bond has a face valueof $100, coupon interest rate of 4%, and a maturity of 10 years. Four(4) years later you sell the bond in the secondary market; however,market interest rates for bonds of equal risk and maturity are now3.5%. Calculate the selling price of your bond. b.Calculate the Annualized Holding Period Return (HPR) on thisinvestment that was held for 4 years.
Assume that you own a $ 1 million par value corporate bond that pays 7% in coupon interest (3.5% semiannual), has 4 years remaining to maturity, and is immediately callable at par. Its current market yield is 7% and it is priced at par. If rates on comparable securities fall by more than 40 basis points (0.2% semiannually), the bond will be called (a) Calculate the bonds price if the market rate increases by 50 basis points (0.25% semiannually) using the present value formula from (b) Calculate the bonds effective duration assuming a 50 basis point increase or decrease in market rates
Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 9.6 perceL (Assume interest payments are semiannual.) (Do not round Intermedlote calculations. Round your finol answer to 2 declmal places.) Bond price Is this a discount or premium bond? O premium bond O discount bond ला here to search | 近 0 F3 F4 F5 F7 F8 F10 F11
A 12% bond of Alpha Company with 15 year to maturity is selling in the market for $955, it has a $1,000 par value and pays interest annually. a. Calculate the both bond's yield to maturity (YTM).b. If your required rate of return is 12% would you buy this bond or not.b. Describe the relationship between the coupon rate and yield to maturity and market value of a bond.
Assume that you own a $1 million par value corporate bond that pays 7% in coupon interest (3.5% semiannual ), has 4 years remaining to maturity, and is immediately callable at par. Its current market yield is 7% and it is priced at par. If rates on comparable securities fall by more than 40 basis (0.2% semiannually), the bond will be called(a) Calculate the bonds price if the market rate increases by 50 basis (0.25% semiannually) using the present value formula from(b) Calculate the bonds effective duration assuming a 50 basis - increase or decrease in market rates
(c) Re-calculate the prices of the bonds if the required return falls to 9%.(d) Explain how underwriters use the overallotment option in IPOs.
You purchase a zero coupon bond with 12 years to maturity and a yield to maturity of 4.93 percent. The bond has a par value of $1,000. What is the implicit interest for the first year? Assume semiannual compounding. a.$27.12 b.$26.89 c.$27.82 d.$24.34 e.$26.71
The prices of zero-coupon bonds with various maturities are given: maturity in years price 1 975.66 2 885.89 3 821.92 4 759.20 5 670.20 A) How could you construct a 1-year forward loan beginning in year 3? face value = ? rate of synthetic loan = ? B) How could you construct a 1-year forward loan beginning in year 4? face value = ? rate of synthetic loan = ?
What is the coupon rate if a two-year $10,000 bond with semiannual coupons and a price $9636.67 if it has a yield to maturity of 6.9%? a. 5.909% b. 6.894% c. 4.924% d. 3.939%
Please show working Please answer ALL OF QUESTIONS 1 AND 2 1. A 7% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 7.5219%.a. What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent.b. What is the bond's YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations. Round your answers to two decimal places. 2. Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 18 years to maturity, and a 9% YTM. What is the bond's price? Round your answer to the nearest cent.
Question A .Consider a 2-year, risk-free bond with a coupon rate of 6% (annual coupons) and a face value of $1,000. If the yield on the above bond is 6%: a. What is the Macaulay duration of this bond? b. If the yield increases to 7% immediately, what does the duration approximation predict will be the percentage change in the bond price? c. If the yield decreases to 5% instead, what is the approximate percentage change in the bond price implied by the bond’s duration? d. After receiving the first coupon payment in year 1, the yield increases to 7% and you decide to sell the bond. What is your annualized HPR? Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line

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