Maturity Price of $1,000 Par Bond (Zero-Coupon) 1year 943.40 2 873.52 3 816.37 a. An 8.5% coupon $1,000 par bond pays an annual coupon will mature in 3 years. What should the bond price be? b. If at the end of the first year the yield curve flattens out at 8%, what will be the 1-year holding- period return on the coupon bond?

Maturity Price of $1,000 Par Bond (Zero-Coupon) 1year 943.40 2 873.52 3 816.37 a. An 8.5% coupon $1,000 par bond pays an annual coupon will mature in 3 years. What should the bond price be? b. If at the end of the first year the yield curve flattens out at 8%, what will be the 1-year holding- period return on the coupon bond?

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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es Find the duration of a 6.6% coupon bond making semiannually coupon payments if it has three years until maturity and has a yield to maturity of 6.6%. What is the duration if the yield to maturity is 9.0%? Note: The face value of the bond is $1,000. Do not round intermediate calculations. Round your answers to 2 decimal places. 6.6% YTM 9% YTM Duration years years
price a 7% bond that matures in 7.5 years if the (annual) market rate of return (YTM) is 6%? (Remember, the coupons are semi-annual). After pricing the bond, the price suddenly drops to 950. What's the annual YTM?
1. A three-year bond with a $1,000 face-value and 10% coupon rate is sold for $1,000 today (Year 1). If one year later (Year 2) the market interest rate decreases by 5%, then this bond will have a market price of $ ____ (round UP to the nearest integer) next year (Year 2). 2. True or False? The current interest rate on a 10-year coupon bond with face value = $1,000 and annual coupon rate = 3.25% is2.42%. This implies the buyer of the bond will receive a $24.2 payment from the bond issuer every year before maturity while holding the bond. 3. A three-year bond with $1,000 face-value and 10% coupon rate is sold for $1,000 today (YEAR 1). If one year later (Year 2) the market interest rate increases by 5%, then this bond will have a market price of $ ________ (round UP to the nearest integer) then (Year 2).
A 10-year maturity, 6.5% coupon bond paying coupons semiannually is callable in five years at a call price of $1,010. The bond currently sells at a yield to maturity of 6% (3% per half-year). a. What is the yield to call annually (write as percentage, rounded to 3 decimal places)? Yield to call ?% b. What is the yield to call annually if the call price is only $960 (write as a percentage, rounded to 3 decimal places)? Yield to call ?% c. What is the yield to call annually if the call price is $1,010, but the bond can be called in two years instead of five years (write as a percentage, rounded to 3 decimal places)? Yield to call ?%
2. A 30-year maturity, 10% coupon bond paying coupons semiannually is callable in 15 years at a call price of $1,100. The bond currently sells at a yield to maturity of 8% (4% per half-year). a. What is the yield to call? b. What is the yield to call if the call price is only $1,050? c. What is the yield to call if the call price is $1,100, but the bond can be called in 10 years instead of 15 years?
Consider a 30-year Bond with $1,000 face value, which offers 10% annual coupon, paid once a year.Assume that interest rates, hence YTM (Yield to Maturity) changed from 6% to 7%. What is the duration of the Bond in years? Enter your answer in the following format: 12.34Hint1: Answer is between 10.24 and 12.77Hint2: Duration = (new bond price - old bond price) * (-100) / old bond price
price a 7% bond that matures in 7.5 years if the (annual) market rate of return (YTM) is 6%? (Remember, the coupons are semi-annual). After pricing the bond, the price suddenly drops to 950. What's the annual YTM?
Assume a bond with 5% coupon has a current market price of $974, a duration of 13.5 years, and interest rate is currently at 5.5%. What is the price change if interest rates decline by 0.5%?
Manshuk
Using duration and convexity approximation, compute the percentage price change on a 10-year fixed coupon bond, if the interest rate increases by 1%. The modified duration of the bond is 6 years, and convexity is 200 year2. Group of answer choices -6% -5% 7% -7%
Find the value of a bond maturing in 11 years, with a $1,000 par value and a coupon interest rate of 11% (5.5% paid semiannually) if the required return on similar-risk bonds is 15% annual interest (7.5% paid semiannually). The present value of the bond is ?
Question A .Consider a 2-year, risk-free bond with a coupon rate of 6% (annual coupons) and a face value of $1,000. If the yield on the above bond is 6%: a. What is the Macaulay duration of this bond? b. If the yield increases to 7% immediately, what does the duration approximation predict will be the percentage change in the bond price? c. If the yield decreases to 5% instead, what is the approximate percentage change in the bond price implied by the bond’s duration? d. After receiving the first coupon payment in year 1, the yield increases to 7% and you decide to sell the bond. What is your annualized HPR? Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line

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