Calculate the yield to maturity for each bond and discuss whether it sells at par, discount, or premium?O A. Bond YTMAOBCO B. BondABсC. BondABCсO D. BondABс12.71% Discount12.00%10.22%YTMSells at par/discount/premiumYTMPremiumDiscountSells at par/discount/premiumDiscount12.71%12.00% Par10.22%PremiumSells at par/discount/premiumPremium12.71%12.00% Par10.22%PremiumSells at par/discount/premiumDiscountYTM10.22%12.00% Par12.71% PremiumBond Par value Coupon interestrate$1000 9%$1000 12%$500ABC12%Years tomaturity181612Current value$820$1000$560

A bond is a type of debt security that represents a loan made by an investor to a borrower, usually…

Calculate the yield to maturity for each bond and discuss whether it sells at par, discount, or premium? OA. Bond YTM A B с с O B. Bond A B 12.71% 12.00% Sells at par/discount/premium YTM Discount Premium 10.22% Discount Sells at par/discount/premium 12.71% Discount 12.00% Par Bond Par value Coupon interest Years to rate maturity 19% JA B C $1000 $1000 $500 12% 12% 18 16 12 Current value $820 $1000 $560

Calculate the yield to maturity for each bond and discuss whether it sells at par, discount, or premium? OA. Bond YTM A B с с O B. Bond A B 12.71% 12.00% Sells at par/discount/premium YTM Discount Premium 10.22% Discount Sells at par/discount/premium 12.71% Discount 12.00% Par Bond Par value Coupon interest Years to rate maturity 19% JA B C $1000 $1000 $500 12% 12% 18 16 12 Current value $820 $1000 $560

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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Bond A Bond B Bond C Face Value 1,000 1,000 1,000 Coupon Payment 75 100 115 Yield to Maturity 10% 10% 10% Maturity Period 12 12 12 Price Bond $829.66 $1,000.00 $1,102.21 Current Yield 9.04% 10.00% 10.43% Bond A is a Discount Bond, Bond B is a Par Value Bond and Bond C is a Premium Bond. The current price of Bond A is $829.66, Bond B is $1,000and Bond C is$1,102.21. The current yield of Bond A is 9.04%, Bond B is 10%and Bond C is10.43%. If the yield to maturity for each bond remains at 9%, what will be the price of each bond 2 years from now?
Suppose a 4-year, 3% annual coupon payment bond has the following sequence of spot rates: Time to maturity Spot rates 1 year 0.39% 2 years 1.40% 3 years 2.50% 4 years 3.60% Assume a par value of $100. What is the yield to maturity for this bond? A. 4.52% B. 3.52% C. 5.12% D. 6.12%
Question 4 Consider the following three bonds: Bond P Bond Q Bond R $1,000 $1,000 $1,000 Par Value Coupon Rate Time to Maturity 5.00% 5.50% 0% 3 years 5 years 6 years Required Yield 4.00% 7.00% 5.20% (a) Explain the term "coupon rate". (b) Calculate the present values of each bond. State whether the bond is above par, at par or below par. (c) Bond ratings are an important element of the bond market. Explain what bond ratings are, who issues the ratings, and what the ratings mean to the average investor.
Question 8 Data: Face amount of bond: 10 000$ Purchase date: 7/1/89 Maturity value: 11 000$ Maturity date: 12/31/94 Coupon rate: 6% per year, compounded semiannually Coupon dates: 6/30 and 12/31 Purchaser's yield to maturity: 8% per year, compounded semiannually Question: In what range is the purchase price of the bond? А. Less than 9 400 В. 9 400, but less than 9 800 С. 9 800, but less than 10 200 D. 10 200 but less than 10 600 Е. 10 600 or more
What is the current yield on a 11% bond with a current market price of $1230? Group of answer choices A. 10.57% B. 7.96% C. 8.94% D. 8.02% E. 6.12%
Given only the information provided, which bond would you suspect of having the lowest duration? Coupon Current Price Remaining Term Bond A 5% $ 703.11 20 years Bond B 7% $ 932.05 10 years Bond C 11% $ 1,078.63 3 years Bond D 11% $ 1,296.89 20 years Question 18 options: Bond A Bond B Bond C Bond D
Maturity (years) Price 2.83% 5.79% The above table shows the price per $100-face value bond of several risk-free, zero-coupon bonds. What is the yield to maturity of the four-year, zero- coupon, risk-free bond shown? 2.85% 12.07% 1 $97.25 2.89% 3 2 $94.53 $91.83 5 4 $89.23 $87.53
Consider the following two-bond portfolio of option-free bonds; Bond A Bond B Years to maturity 5 years 10 years Coupon rate 5% 5% Par value 1000 1000 Yield to maturity 8% 6% Par amount owned R3,45 million R2 million Market value R30 367.59 (in 000’s) R18 528 (in 000’s) Assuming that Bond A is an option-free bond, calculate the bond’s modified duration using Macauly’s Duration.
Assume 2 bonds with following features with the following features bond A B Par value 100 100 Coupon rate 10% 8% Required: a)Determine the value of the bonds. Assume an interest rate of 12% b)If the rates increase by 1%, which bond would you choose?
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BOND PRICE A B с 101.886 5% 100 6% 97.327 5% COUPON TIME TO RATE O Bond C Bond A Which bond will most likely experience the smallest percentage change in price if the market discount rates for all three bonds increase by 100 basis point? Bond B MATURITY 2 years 2 years 3 years

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