bond with a maturity date one year from now has a face value of $2,000 and a coupon rate of 4 %. Interest rates have increased in the market, changing the bond's price to $1,873.87. For an investor purchasing the bond today, what is the bond yield? Write the exact answer. Do not round.

bond with a maturity date one year from now has a face value of $2,000 and a coupon rate of 4 %. Interest rates have increased in the market, changing the bond's price to $1,873.87. For an investor purchasing the bond today, what is the bond yield? Write the exact answer. Do not round.

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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PICK ONE: Explain why YOU: Suppose that 6 months after you purchase the bond, the market rate for interest on this type of bond falls to 7.00%. This will cause the (coupon / market price / par value) to (fall / rise). From the issuer’s perspective, the lower interest rate means that he or she would be (worse / better) off issuing new bonds at this lower rate than continuing to pay you 9%.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
please don't solve excel version. Please make a classic transactional solution with formulas.
You have purchased a bond for $973.02. The bond has a coupon rate of 6.4%, pays interest annually, has a face value of $1,000, 4 years to maturity, and a yield to maturity of 7.2%. You expect that interest rates will fall by .3% later today. a) Calculate the bond’s macauly duration b) Use the modified duration to find the approximate percentage change in the bond's price. Find the new price of the bond from this calculation. c) Suggest how the estimate in part (b) can be improved.
A bond has the following trading data: Coupon rate = 7 1/4%; Current price = 107.78125% of par; Maturity = 2 years. Bonds such this pay interest semiannually. DURATION. Calculate the duration of this bond. Be sure to store your intermediate data as you calculate your final answer. Question options: 1) 1.934 years 2) 1.907 years 3) 1.852 years 4) None of the above
Consider a 26-year bond with 6 percent annual coupon payments. The market rate (YTM) is 8.6 percent for this bond. The current yield of the bond is__________ percent. Answer it in percentage without the % sign, and round it to two decimal place, e.g., 5.69. Your Answer: Answer Chund
A 30-year maturity bond making annual coupon payments with a coupon rate of 14.0% has duration of 11.36 years and convexity of 186.4. The bond currently sells at a yield to maturity of 8%. a. Find the price of the bond if Its yield to maturity falls to 7%. (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? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Predicted price c. What price would be predicted by the duration-with-convexity rule? (Do not round Intermediate calculations. Round your answ to 2 decimal places.) Predicted price
you invested in a corporate bond that has a market price today of R983.87and a yield to maturity of 7%. This bond has a modified duration of 5.3. You believe that interest rates are going to rise by 106 basis points. What price do you expect your bond to trade at if this anticipated change in the yield occurs?Use the duration rule to calculate your answer , in rands (R), correctto Two decimal places.
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.
Consider a 25-year bond with a face value of $1,000 that has a coupon rate of 5.8%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ *** (Round to the nearest cent.)
Consider a bond with a coupon of 5 percent, seven years to maturity, and a current price of $1,052.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
A bond has a coupon rate of 11.6 percent and 4 years until maturity. If the yield to maturity is 10.5 percent, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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