One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds pay interest annually, have 10-year maturities, and sell at a yield to maturity of 10%. a. If their yields to maturity next year are still 10%, what is the rate of return on each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Rate of return Bond 1 Bond 2 b. Does the higher-coupon bond give a higher rate of return over this period? Does the higher-coupon bond give a higher rate of retums over this period? [No

One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds pay interest annually, have 10-year maturities, and sell at a yield to maturity of 10%. a. If their yields to maturity next year are still 10%, what is the rate of return on each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Rate of return Bond 1 Bond 2 b. Does the higher-coupon bond give a higher rate of return over this period? Does the higher-coupon bond give a higher rate of retums over this period? [No

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 J has a coupon rate of 6 percent. Bond K has a coupon rate of 9 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond J? -17.95% -15.97% -16.97% -17.97% If Interest rates suddenly rise by 3 percent, what is the percentage price change of Bond K? -14.82% -16.80% -16.82% 27.26% If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond J? -17.99% 23.11% 23.09% -23.38% If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond K? 21.46% -4.84% 21.34% -16.84%
A 30-year maturity bond making annual coupon payments with a coupon rate of 14.5% has duration of 11.32 years and convexity of 185.2. The bond currently sells at a yield to maturity of 8%. Required: a. Find the price of the bond if its yield to maturity falls to 7%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of the bond b. What price would be predicted by the duration rule, if its yield to maturity falls to 7% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price
Consider three bonds with 5.9% coupon rates, oll selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long term bond has maturity 30 years a. What will be the price of each bond if their yields increase to 6.9%? (Do not round intermediate calculations. Round your answers to 2 decimal places) 30 Years 4 Years $. 8 Years Bond price b. What will be the price of each bond if their yields decrease to 4.9% (Do not round intermediate calculations. Round your answers to 2 decimel places.) 4 Years 8 Years 30 Years Bond price
A bond with a coupon rate of 10 percent sells at a yield to maturity of 11 percent. If the bond matures in 10 years, what is the Macaulay duration of the bond? What is the modified duration? (Do not round intermediate calculations. Round your answers to 3 decimal places.) Macaulay Modified Duration 5.308 years 4.782 years
One bond has a coupon rate of 7.6%, another a coupon rate of 9.3%. Both bonds pay interest annually, have 14-year maturities, and sell at a yield to maturity of 8.0%. a. If their yields to maturity next year are still 8.0%, what is the rate of return on each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Rate of return Bond 1 % Bond 2 % b. Does the higher-coupon bond give a higher rate of return ove this period? Does the higher-coupon bond give a higher rate of return over this period?
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Maturity (Years) 1 2 3 4 Maturity (years) 1 2 3 4 Maturity (Years) 2 3 4 $ $ $ $ b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ $ $ Price of Bond 983.40 918.47 867.62 774.16 Price of Bond $983.40 918.47 867.62 774.16 Price of Bond YTM 918.47 867.62 774.16 % % % % Forward Rate % % % #
Bond J has a coupon rate of 6 percent. Bond K has a coupon rate of 11 percent. Both bonds have 8 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond J? O-20.85% O-18.85% O-19.85% O-20.83% If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond K? 28.14% O-16.88% O-18.88% Ⓒ-18.86%
A bond has a coupon rate of 9.2 percent and 5 years until maturity. If the yield to maturity is 9.3 percent, what is the price of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
need help with finding the current yield and capital gains yield for bond p and bond d, thank you
A Treasury bond that settles on October 18, 2022, matures on March 30, 2041. The coupon rate is 6.10 percent, and the bond has a yield to maturity of 5.57 percent. What are the Macaulay duration and modified duration? Note: Use the duration functions in Excel to solve the problem. Do not round intermediate calculations. Round your answers to 4 decimal places. Answer is complete but not entirely correct. Macaulay duration 11.4179 Modified duration 10.8154 X
Consider a bond with maturity 2 year, 100 face value, coupon 3.60%, and yield 7.20%. Compute a dollar duration numerically using a dy =0.001%, Report you result with two digits decimal accuracy and the correct sign. Example:-185.95 Blank Excel Worksheet Your Answer: Answer
Consider a bond with a coupon of 4.6 percent, five years to maturity, and a current price of $1,047.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price

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