Below is a list of prices for zero-coupon bonds of various maturities.Price of $1,000Par Bond (Zero-Maturity(Years)123Coupon)$988.00888.50842.30Required:a. A 4.5% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bondbe?b. If at the end of the first year the yield curve flattens out at 7.0%, what will be the 1-year holding-period return on the coupon bond?Complete this question by entering your answers in the tabs below.Required A Required BA 4.5% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on thebond be?Note: Round your answer to 2 decimal places.Yield to maturity%

a. The yield to maturity (YTM) on the 4.5% coupon bond that matures in 3 years is approximately…

Answered: Below is a list of prices for…

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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The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 1 4.6% 5.6 6.6 2 3 Next year at this time, you expect it to be: Maturity (Years) 2 YTM (%) 5.6% 6.6 7.6 Required: a. What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? b. Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? c. Is the market's expectation of the return on the 3-year bond greater or less than yours? Complete this question by entering your answers in the tabs below. Required A Required B Required C Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? Note: Round your answers to 2 decimal places. Maturity 1 2 YTM % %
4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…
Please answer all questions what is the price of the bond using a semiannual convention if the maturity is 10 years, 30 years, 50 years and 80 years with explanations Thx .
Suppose that all bonds have $1,000 of face value. The current prices of zero coupon bonds are as follows: $960 for a one-year bond; $910 for a two-year bond; $850 for a three-year bond. a. What is the price of a three-year bond with 8% annual coupon payment? b. What is the YTM of the two-year zero coupon bond? c. Consider the following two-year bonds: (i) a zero coupon bond as above; (ii) a bond with 6% annual coupon payment. Whose YTM is higher?
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 9.00%. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. a. What is the yield to maturity if the bond is selling for $970? Yield to maturity b. What is the yield to maturity if the bond is selling for $1,000? Yield to maturity % c. What is the yield to maturity if the bond is selling for $1,135? Yield to maturity
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.
Required: a. Find the duration of a 6.4% coupon bond making annual coupon payments if it has three years until maturity and has a yield to maturity of 6.4%. Note: The face value of the bond is $1,000. Do not round intermediate calculations. Round your answer to 2 decimal places. b. What is the duration if the yield to maturity is 10%? Note: The face value of the bond is $1,000. Do not round intermediate calculations. Round your answer to 2 decimal places. a. 6.4% YTM b. 10% YTM years years
Required: Find the duration of a bond with settlement date May 29, 2018, and maturity date November 19, 2027. The coupon rate of the bond is 6%, and the bond pays coupons semiannually. The bond is selling at a yield to maturity of 7%. (Do not round intermediate calculations. Round your answers to 4 decimal places.) Macaulay duration Modified duration
The term structure for zero-coupon bonds is currently: Maturity (Years) YTM (%) 1 5.2% 2 6.2 3 7.2 Next year at this time, you expect it to be: Maturity (Years) YTM (%) 1 6.2% 2 7.2 3 8.2 Required: What do you expect the rate of return to be over the coming year on a 3-year zero-coupon bond? Under the expectations theory, what yields to maturity does the market expect to observe on 1- and 2-year zeros at the end of the year? Is the market's expectation of the return on the 3-year bond greater or less than yours?
A) 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) B) If the yield to maturity for a one year zero coupon bond is 5.2% and the yield to maturity for a 2-year zero coupon bond is 5.8%, what is the implied future short rate from year 1 to 2 (use 5 decimal places, write 3.333% as .03333)?
Prices of zero-coupon bonds reveal the following pattern of forward rates: Year 1 2 3 Forward Rate 4% 5 6 In addition to the zero-coupon bond, investors also may purchase a 3-year bond making annual payments of $40 with par value $1,000. Required: a. What is the price of the coupon bond? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What is the yield to maturity of the coupon bond? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Under the expectations hypothesis, what is the expected realized compound yield of the coupon bond? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. d. If you forecast that the yield curve in 1 year will be flat at 5.5%, what is your forecast for the expected rate of return on the coupon bond for the 1-year holding period? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Price b. Yield to maturity c.…
A 14-year bond pays semi-annual coupons at j2 = 9% and has a yield rate of j2 = 7.1%. If the book value immediately after the 7th coupon payment is $1038.45, and the book value immediately after the 11th coupon payment is $1034.51, what is the bond's face value? Answer: $ NOTE: Assume the note is NOT redeemable at par.

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