Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) 1 Price of $1,000 Par Bond (Zero- Coupon) $ 988.50 891.00 844.90 2 3 Required: a. A 5.2% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? b. If at the end of the first year the yield curve flattens out at 6.2%, what will be the 1-year holding-period return on the coupon bond?

Below is a list of prices for zero-coupon bonds of various maturities. Maturity (Years) 1 Price of $1,000 Par Bond (Zero- Coupon) $ 988.50 891.00 844.90 2 3 Required: a. A 5.2% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? b. If at the end of the first year the yield curve flattens out at 6.2%, what will be the 1-year holding-period return on the coupon 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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What is the yield to maturity of a bond that just paid an annual coupon payment of $50, has 10 years remaining until maturity, a $1,000 par value when priced at a $965? (please show work or how to enter into a BA II plus) a. 4.95 b. 2.72 c. 5.46 d. 5.00 e. 10.57
Consider the following coupon bond issued by XYZ.inc Term: 1 year Payment: 100 Face Value: 1,500 Currently the prevailing risk free rate is 0.01 and the market places a risk premium on XYZ.inc bonds of 0.09 Compute the present value of an XYZ.inc bond? Record your unitless answer to the nearest cent. Your Answer:
how does the equation for valuing a bond change if semiannual payments are made? find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd equal 13%.
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…
1) ( end of each year. (e¬0.1 = 0.9, e¬0.2 = 0.8, e-0.3 = 0.7, e-0.4 - 0.6) s) A four-year bond with a yield of 10% (continuously compounded) pays an 20% coupon at the a) What is the bond's price? b) What is the bond's duration? c) Use the duration to calculate the effect on the bond's price of a 0.15% increase in its yield.
What is the Macaulay duration of a semi-annual bond with a coupon rate of 7 percent, five years to maturity, and a current price of $959? What is the modified duration? Duration is __. years. Modified duration is __ years.
A 30-year maturity bond making annual coupon payments with a coupon rate of 14.5% has duration of 10.64 years. The bond currently sells at a yield to maturity of 9%. Required: a. Find the price of the bond if its yield to maturity falls to 8%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of the bond b. What price would be predicted by the duration rule, if its yield to maturity falls to 8% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price
A two-year bond with par value $1,000 making annual coupon payments of $98 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 7.8%, (b) 9.8%, (c) 11.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
What is the price of the following semi-annual bond? face value: maturity: years coupon rate: discount rate: $1,000 10 8% 9%
If the yield to maturity for a two year zero coupon bond is 5.8% and the yield to maturity for a 3 year zero coupon bond is 6.1%, what is the implied future short rate from year 2 to 3 (use 5 decimal places, write 3.333% as .03333)? QUESTION 5 Price a 5 year 4% semiannual coupon bond if the yield to maturity is 6% (write the price as if par is 100, use 5 decimal places)
calculate the price of a $1,000, 5% bond with 4 years to maturity with 6.5 % market interest rates. what is the duration of this bond? calculare the expected orice change in $s if interest rates increase to 7% using the duration price approximation forumula
You are given the following information on two traded bonds making semi-annual coupon payments. Bond Face Value Coupon Maturity Price A $1,000 3% 12 years $850.10 B $1,000 10% 12 years $970.00 Calculate Yield to Maturity (YTM) for bonds A and B.

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