please help with the fv value that i got wrong Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able toreinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is yourrealized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.)Answer is complete but not entirely correct.FVSelling priceRealized yield$ 483.26 X$959.115.37 % Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able toreinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is yourrealized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.)Answer is complete but not entirely correct.FVSelling priceRealized yield$ 1,442.37 X$959.115.37 %

Bonds are debt instrument that offers fixed interest payment also called coupon payments. The…

Answered: Assume you purchase (at par) one…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Assume you purchase (at par) one 17-year bond with a 6.35 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.35 percent. If you sell the bond after 12 years when the yield to maturity is 7.35 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. FV Selling price Realized yield $ $ 973.52 959.38 5.65 %
Assume you purchase (at par) one 14-year bond with a 6.20 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.20 percent. If you sell the bond after 9 years when the yield to maturity is 7.20 percent, what is your realized yield? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Assume you purchase (at par) one 19-year bond with a 6.55 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.55 percent. If you sell the bond after 14 years when the yield to maturity is 7.55 percent, what is your realized yield? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Face Value Selling price Realized yield ✓ Answer is not complete. $ 959.59 5.81 %
Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 8%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
Assume you purchase (at par) one 11-year bond with a 6.95 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 percent. If you sell the bond after 6 years when the yield to maturity is 7.95 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) FV $ 1,018.53 Selling price 960.02 Realized yield $ 5.30 %
Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year maturity and a coupon of 2% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 10%. a. What will be your cash flow at the end of the year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be your real return? c. What will be your nominal return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % % Real return Nominal return b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 1%
A 6.45 percent coupon bond with 24 years left to maturity is priced to offer a 5.7 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.2 percent. What would be the total return of the bond in dollars? (Assume interest payments are semiannual.) (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Answer is complete but not entirely correct. Total return $ 2.64 × What would be the total return of the bond in percent? (Assume interest payments are semiannual.) (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Answer is complete but not entirely correct. Total return 0.14%
What is the Macaulay duration of a 7 percent semiannual coupon bond with two years to maturity and a current price of $1,055.30? (Note: You are required to solve the problem by calculating "Years \times PV / Bond Price" for each cash flow and summing the results. YTM and PV must be calculated using a financial calculator. Round your answer to four decimal places.)
Suppose the current yield on a one-year zero-coupon bond is 4%, while the yield on a five-year zero-coupon bond is 6%. Neither bond has any risk of default. Suppose you plan to invest for one year. You will earn more over the year by investing in the five-year bond as long as its yield does not rise above what level? (Assume $1 face value bond.) Hint: It is best not to round intermediate calculations-make sure to carry at least four decimal places in intermediate calculations. Note: Assume annual compounding. The yield should not rise above %. (Round to two decimal places.)
The yield to maturity on one-year zero-coupon bonds is 8.4%. The yield to maturity on two-year zero-coupon bonds is 9.4%. Required: a. What is the forward rate of interest for the second year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If you believe in the expectations hypothesis, what is your best guess as to the expected value of the short-term interest rate next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. If you believe in the liquidity preference theory, is your best guess as to next year’s short-term interest rate higher or lower than in (b)?multiple choice Lower Higher
You own a 5% bond maturing in two years and priced at 87%. Suppose that there is a 10% chance that at maturity the bond will default and you will receive only 40% of the promised payment. a. What is the bond's promised yield to maturity? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Promised yield % b. What is its expected yield? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected yield %

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS