Julie has one share of stock and one bond. The total value of the two securities is $1,102.14. The stock pays annual dividends. The next dividend is expected to be $15.15 and paid in one year. In two years, the dividend is expected to be $11.79 and the stock is expected to be priced at $254.84. The stock has an expected return of 11.19 percent per year. The bond has a coupon rate of 7.10 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? 8.68% (plus or minus 4 bps) 8.51% (plus or minus 4 bps) 4.26% (plus or minus 4 bps) 9.25% (plus or minus 4 bps) the answer cannot be obtained based on the given information

Julie has one share of stock and one bond. The total value of the two securities is $1,102.14. The stock pays annual dividends. The next dividend is expected to be $15.15 and paid in one year. In two years, the dividend is expected to be $11.79 and the stock is expected to be priced at $254.84. The stock has an expected return of 11.19 percent per year. The bond has a coupon rate of 7.10 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? 8.68% (plus or minus 4 bps) 8.51% (plus or minus 4 bps) 4.26% (plus or minus 4 bps) 9.25% (plus or minus 4 bps) the answer cannot be obtained based on the given information

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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Similar questions

Mary Blake is considering whether to buy stocks or bonds. She has a good understanding of the pros and cons of both. The stock she is looking at is trading at $59.25 with an annual dividend of $3.99. Meanwhile, the bond is trading at 96.25% with an annual interest rate of 11.5%. Calculate for Mary her yield for the stock and the bond. (Round your answers to the nearest tenth percent.) STock: Bond:
Lola Ruiz has a bond that has 10 years to maturity, a face value of $1,000, an 7 percent interest rate, and a market price of $1,350. What is the dollar amount of annual interest on this bond?
Singtel recently issued a graded investment bond. The bond has a $1,000 par value which will mature in 12 years’ time. It has a coupon interest rate of coupon of 11% and pays interest annually. As an investor, you are to determine the following: i. Calculate the value of the bond if the required rate of return is 11 percent. ii. Calculate the value of the bond if the required rate of return is 15 percent. iii. Based on the above findings in part (i) and (ii) above, and discuss the relationship between the coupon interest rate on a bond and the required return and the market value of the bond relative to its par value. iv. Identify two possible reasons that could cause the required return to differ from the coupon interest rate.
Last year Janet purchased a $1,000 face value corporate bond with a 10% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.16%. If Janet sold the bond today for $1,045.92, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. Please show calculations using calculator.
Mary Blake is considering whether to buy stocks or bonds. She has a good understanding of the pros and cons of both. The stock she is looking at is trading at $78.00 with an annual dividend of $7.25. Meanwhile, the bond is trading at 96.50% with an annual interest rate of 11.5%. Calculate for Marry her yield for the stock and the bond. (round your answer to the nearest tenth percent). Stock %: ?? Bond %: ??
Carol plans to invest in a 12 year bond issued by Iris Ltd that pays a coupon of 4.8 percent. Coupon payments are made semi-annually. If the current market rate is 6.4 percent, what is the maximum amount Carol should be willing to pay for this bond? Assume it has a par value of $1000.
Last year Janet purchased a $1,000 face value corporate bond with a 7% annual coupon rate and a 10-year maturity. At the time of the purchase, it had an expected yield to maturity of 8.1%. If Janet sold the bond today for $1,086.18, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
Linda is interested in purchasing a corporate bond that was issued with an 8% annual coupon a semiannual interest payment of $40, and maturity in fifteen years. What is the par value of this bond?
Jenna bought a bond that was issued by Sherlock Watson Industries (SWI) three years ago. The bond has a $1,000 maturity value, a coupon rate equal to 9%, a market rate (yield to maturity) of 10%, and it matures in 17 years. Interest is paid every six months; the next interest payment is scheduled six months from today.
Sara owns one bond A and one bond B. The total value of these two bonds is $1,860.00. Bond A pays semi-annual coupons, matures in 12 years, has a face value of $1,000.00, and pays its next coupon in 6 months. Bond B pays annual coupons, matures in 3 years, has a face value of $1,000.00, has a yield-to- maturity of 10.64 percent, and pays its next coupon in one year. Both bonds have a coupon rate of 9.30 percent. What is the yield-to-maturity for bond A? O 10.54% (plus or minus 2 bps) O 10.92% (plus or minus 2 bps) O 5.92% (plus or minus 2 bps) O 8.87% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer
Last year Janet purchased a $1,000 face value corporate bond with a 10% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 10.34 %. If Janet sold the bond today for $1,164.56, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. %
Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) O7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information

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