Given a 30-year par $1.000 bond with coupon payments of $40 every 6 months. (a) Let the yield to maturity be an arithmetic sequence from 0.1 to 1.0 with length 1000. Find the corresponding coupon prices, and make a plot for its coupon price against yield to maturity. (b) If this coupon bond is selling for $1250, find the yield to maturity.

Given a 30-year par $1.000 bond with coupon payments of $40 every 6 months. (a) Let the yield to maturity be an arithmetic sequence from 0.1 to 1.0 with length 1000. Find the corresponding coupon prices, and make a plot for its coupon price against yield to maturity. (b) If this coupon bond is selling for $1250, find the yield to maturity.

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

See similar textbooks

Similar questions

Bond A is a 4-year bond with a 10% coupon rate and Bond B is a 2-year bond with a 20% coupon rate. Both bonds have a face value of £100, and all coupons are paid annually, starting in year 1. Consider a portfolio that consists of one unit of Bond A and one unit of Bond B. The yield curve is flat at ? = 5%. What is the Macaulay duration of this portfolio?
Suppose a 5% coupon, 4 year bond is selling for $990. The face value is $1000. The coupon ispaid every six months. Answer the following questions. (a) Calculate the yield to maturity of this bond. (b) Calculate the price of this bond if the yield to maturity increases by 1% with maturityunchanged. (c) Calculate the price of this bond if the yield to maturity decreases by 1% with maturityunchanged.
Consider a bond that has a face value of $1,000. The bond has a maturity of 25 years and pays coupons of 5.5% per annum. If the bond's required rate of return is 8.0% per annum nominal, and coupons are received semi-annually, what is the current market price of the bond?
Suppose a five-year, $1,000 bond with annual coupons has a price of $896.24 and a yield to maturity of 6.4%.What is the bond's coupon rate? (round to 3 decimal places)
Suppose a five-year, $1,000 bond with annual coupons has a price of $896.99 and a yield to maturity of 6.1%. What is the bond's coupon rate? The bond's coupon rate is%. (Round to three decimal places.)
Calculate the price of a 10 year, $1000 par value bond that makes semiannual payments, has a coupon rate of 12%. Calculate the price using a yield to maturity of 13% and illustrate it on a timeline. Is the bond traded at premium, par or discount?
Suppose a five-year, $1000 bond with annual coupons has a price of $ 898.69 and a yield to maturity of 6.5 %. What is the bond's coupon rate? The bond's coupon rate is enter your response here%. (Round to three decimal places.)
A 10-year, 6.1-percent coupon bond is selling for 102.0 percent of par. What is the bond's market yield if it makes semi-annual coupon payments? (Round answer to 3 decimal places, e.g. 5.795.) Please show and explain your steps in detail and show how to calculate this on a financial calculator as well.
Suppose you purchase a ten-year bond with 12% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 10.64% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ number.) (Round to the nearest cent. Enter a cash outflow as a negative The total cash flow at time 4 (after the fourth coupon) is $. (Round to the nearest cent. Enter a cash outflow as a negative number.) b. What is the internal rate of return of your investment? The internal rate of return of your investment is %. (Round to two decimal…
Consider purchasing a five-year, $1,000 par value bond with a 6% coupon and a 7% yield. The rates on the bond immediately after purchase increase to 8% and stay there till maturity. Calculate the realised horizon yield on a bond that you intend to hold to maturity. Annual interest accrues.
Suppose a five-year, $1,000 bond with annual coupons has a price of $896.98 and a yield to maturity of 6.2%. What is the bond's coupon rate? The bond's coupon rate is%. (Round to three decimal places.)
Consider purchasing a five-year, $1,040 par value bond with a 6% coupon and a 7% yield. The rates on the bond immediately after purchase increase to65% and stay there till maturity. Calculate the realised horizon yield on a bond that you intend to hold to maturity. Annual interest accrues.

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS