Lydia just purchased a Treasury bond for $101.68 at a yield rate of j2=6.94% p.a. The duration of Lydia's bond is 3.0639 years. Using the bond price sensitivity formula, calculate the change in price of Lydia's bond that would result from an increase in the yield rate (j2) of 49 basis points. Round your answer to four decimal places. (The values below are all in dollars.) O a. -0.7377 O b. -0.7137 O c. -1.4275 d. -1.4753

Lydia just purchased a Treasury bond for $101.68 at a yield rate of j2=6.94% p.a. The duration of Lydia's bond is 3.0639 years. Using the bond price sensitivity formula, calculate the change in price of Lydia's bond that would result from an increase in the yield rate (j2) of 49 basis points. Round your answer to four decimal places. (The values below are all in dollars.) O a. -0.7377 O b. -0.7137 O c. -1.4275 d. -1.4753

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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An investor purchased the following five bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to the nearest cent and percentage answers to two decimal places. Percentage Change 10-year, 10% annual coupon 10-year zero 5-year zero 30-year zero $100 perpetuity Price @ 8% $ Price @ 6% $ %
Four years ago, Helen Stills bought six-year, 5.0 percent coupon bonds issued by the Ivanhoe Corp. for $954.80. If she sells these bonds at the current price of $892.92, what will be her realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)
The interest rate on one-year Treasury bonds is 0.8 percent, the rate on two-year T-bonds is 0.9 percent, and the rate on three-year T-bonds is 1.0 percent. Using the expectations theory, compute the expected one-year interest rate in the second year (Year 2 only). Round your answer to one decimal place. % Using the expectations theory, compute the expected one-year interest rate in the third year (Year 3 only). Round your answer to one decimal place. %
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to the nearest cent and percentage answers to two decimal places. Please see image I am not sure if this counts as one question but it is one in the book.
answer both components PLEASE!
Lydia just purchased a Treasury bond for $108.723 at a yield rate of j2=7.68% p.a. The duration of Lydia's bond is 9.4099 years. Using the bond price sensitivity formula, calculate the change in price of Lydia's bond that would result from an increase in the yield rate (j2) of 46 basis points. Round your answer to four decimal places. (The values below are all in dollars.) a.-2.2661 b.-4.5321 c.-4.3705 d.-2.1852
Laura Hall is planning to buy 10-year zero coupon bonds issued by the U.S. Treasury. If these bonds have a face value of $1,000 and are currently selling at $409.39, what is the expected return on them? Assume that interest compounds semiannually on similar coupon paying bonds. (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)
Jay purchased a Treasury bond with a coupon rate of 4.49% and face value of $100. The maturity date of the bond is 15 March 2029. (b) In fact, Yuri changes his plan and Jay plans to sell this bond on 7 January 2022. What was Jay's sale price (rounded to four decimal places)? Assume a yield of 3.02% p.a. compounded half - yearly. Question Answer a. 111.6359 b 110.8412 c. 109.1924 d .108.7396
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4 yrs ago, Mrs. Horn bought 6-yr, 5.7% coupon bonds issued by CPFCU for $955.36. If she sells these bonds at the current price of $892.86, what will be her realized yield on the bonds? Assuming similar coupon-paying bonds make annual coupon pymts. (round intermediate calculations to 5 decimal places & final answer to 2 decimal places) Realized rate of return _______%
a. Assuming you purchased the bond for $350 what rate of return would you earn if you held the bond for 25 years until it matured with a value $1000? a. Rate of return____% b. Suppose under the terms of thebond you could redeem the bond in 2024. DMF agreed to pay an annual interest rate of 1.4 percent until the date. How much would the bond be worth at that time? b. Bond value_____ c. In 2024 instead of cashing in the bond for its then current value you decide to hold the bond until it mature in 2043. What annual rate of return will you earn over the last 19 years? c. Rate of return___%
Using semiannual compounding, find the prices of the following bonds: a. A 9.4%, 15-year bond priced to yield 7.2%. b. A 7.3%, 10-year bond priced to yield 9.5%. c. A 12.8%, 20-year bond priced at 10.6%. Repeat the problem using annual compounding. Then comment on the differences you found in the prices of the bonds. a1. Using semiannual compounding, the price of the bond is $. (Round to the nearest cent.) b1. Using semiannual compounding, the price of the bond is $. (Round to the nearest cent.) c1. Using semiannual compounding, the price of the bond is $. (Round to the nearest cent.) a2. Using annual compounding, the price of the bond is $ b2. Using annual compounding, the price of the bond is $ c2. Using annual compounding, the price of the bond is $. (Round to the nearest cent.) Comment on the differences you found in the prices of the bonds. (Select the best answer below.) (Round to the nearest cent.) (Round to the nearest cent.) Bonds selling at a premium sell at lower prices when…

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