At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2022: 7.20 May 26 116.40625 116.46875 -.46875 5.42 113.53125 113.59375 -.21875 5.38 8.95 May 26 12.70 May 26 148.68750 148.87500 -.53125 5.46 The bond in the middle is callable in February 2023. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?)

At one point, some Treasury bonds were callable. Consider the prices on the following three Treasury issues as of May 15, 2022: 7.20 May 26 116.40625 116.46875 -.46875 5.42 113.53125 113.59375 -.21875 5.38 8.95 May 26 12.70 May 26 148.68750 148.87500 -.53125 5.46 The bond in the middle is callable in February 2023. What is the implied value of the call feature? Assume a par value of $1,000. (Hint: Is there a way to combine the two noncallable issues to create an issue that has the same coupon as the callable bond?)

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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(Round to the nearest cent.) Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Today is February 15, 2008 Issue Date Coupon Rale Maturity Date Current Type Price YTM Rating Yield Note Feb 2006 7.25% 2-15-2016 5.722% AAA Print Done %24
The following bond was quoted in The Wall Street Journal: Bonds Current yield Volume Close Net change NJ 4.125% 35 2.5% 5 112.875% +1.25% Seven bonds were purchased yesterday, and 7 bonds were purchased today. How much more did the 7 bonds cost today?
6. Below is a list of daily Treasury note and bond listings from Wall Street Journal. Treasury bonds make semiannual payments. First column is the maturity date. Second column is the coupon rate. Third and Fourth columns show the bid and ask prices. Treasury prices are quoted as a percentage of face value. So on the 2025/10/31 bond, the bid price is shown to be 106.212. With $1000 face value, this quote represents $1062.12. The Fifth column shows the change in the ask price from the previous day, measured as percentage of face value. So the 2025/10/31 bond's ask price decreased by 0.002%, or $0.02 with face value of $1000, from previous day's value. The last column shows the yield to maturity, based on the ask price. Locate the Treasury bond in Figure 7.5 maturing in November 2026. Is this a premium or a discount bond? What is its current yield? What is its yield to maturity? What is the bid-ask spread in dollars? Assume a par value of $10,000. Maturity 10/31/2025 11/15/2026 Coupon…
dollars of the February 2005 Treasury note? nearest cent.) Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Today is February 15, 2008 Current Сoupon Rate Maturity Date Typo Issue Price YTM Rating Date Yield Note Feb 2005 8.00% 2-15-2015 5.301% AAA Print Done
Consider the following three bond quotes: a Treasury note quoted at 97.69, a corporate bond quoted at 103.65, and a municipal bond quoted at 102.30. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars? (Do not round intermediate calculations and round your final answers to 2 decimal places.) treasury note corporate bond municipal bond
The government benchmark bond spot rates, for annual compounding bonds, is shown below: 6.60% 6.90% What is the closest 1-year forward rate 3-year from period zero (f 3.1)? 7.20% 7.50% Year 1 2 7.80% 3 4 5 Spot rate 5.90% 6.40% 6.60% 6.90% 7.30%
3) Answer the below questions for bonds A and B. Bond A 8% 8% 2$100.00 $100.00 $100.00 $104.055 CouponYield to maturity Maturity (years) ParPrice Bond B 9% 8% (a) Calculate the actual price of the bonds for a 100-basis-point (1% annual) increase in interest rates. (b) Using (modified) duration, estimate the price of the bonds for a 100-basis- 5 point (1% annual) increase in interest rates.(c) Explain why your answers in parts (a) and (b) differ.
Calculate the accrued interest (in $) and the total purchase price (in $) of the bond purchase. (Round your answers to the nearest cent.) Time Coupon Market Accrued Commission Bonds Total Company Since Last Rate Price Interest per Bond Purchased Price Interest Company 1 8.25 102.50 78 days $ 26.81 $3.50 15 $ 1,537.50
Consider the following three bond quotes: a Treasury note quoted at 98.84, a corporate bond quoted at 103.10, and a municipal bond quoted at 101.75. If the Treasury and corporate bonds have a par value of $ 1,000 and the municipal bond has a par value of $5,000, what are the prices of these three bonds in dollars?
4. (a) Treasury bond markets in New Zealand and the U.S. are dealer mar- kets. What are the pros and cons of this market structure as com- pared to trading securities on an exchange? (b) The Reserve Bank of New Zealand reports the following (annually compounded) treasury bond spot rates (as of 26 July 2022). Maturity 1 year 2 years 5 years 10 years Rate 3.38 3.53 3.53 3.60 Can we conclude that the market is expecting short term interest rates to rise over the next 10 years? Discuss. (c) You are in the United States. You decide that the market has under- estimated the yield on long term Treasury bonds. You observe the following bond: Maturity 15 May 2052 Coupon 2.875 Price 97.1340 Yield 3.007 Describe how you would use this bond to trade in order to profit from your beliefs.
Bonds with a face value of $530000 and a quoted price of 96.25 have a selling price of $508933. O $511450. $508813. O $510125.
Calculate the total annual interest, total cost, and current yield for the bond. (Round the "Current yield" to the nearest tenth percent and other answers to the nearest whole dollar.) Number of bonds Total annual Bond Selling price Total cost Current yield purchased interest Wang 6 1/2% 26 4. 68.125 % 96 Prev 9 of 18 Next > M

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