Over the past year (from one year ago to today), the inflation rate was 3.26% the risk-free rate was 5.54% and the real rate of return for a bond was 10.13%. The bond is currently priced at $889.00 pays annual coupons of $109.00 and just made a coupon payment. What was the price of the bond one year ago? $877.59 (plus or minus $1.00) $917.28 (plus or minus $1.00) $906.20 (plus or minus $1.00) $862.80 (plus or minus $1.00) None of the above is within $1.00 of the correct answer

Over the past year (from one year ago to today), the inflation rate was 3.26% the risk-free rate was 5.54% and the real rate of return for a bond was 10.13%. The bond is currently priced at $889.00 pays annual coupons of $109.00 and just made a coupon payment. What was the price of the bond one year ago? $877.59 (plus or minus $1.00) $917.28 (plus or minus $1.00) $906.20 (plus or minus $1.00) $862.80 (plus or minus $1.00) None of the above is within $1.00 of the correct answer

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

One year ago you purchased a bond for $9,000 with a coupon rate of 3%. Today the price is $8,900. Write the expression to find the rate of return of the bond over the last year.
You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $1,044. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. The bonds have a par value of $1,000. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total real return %
A twenty-year government bond with a face value of 120$ makes annual coupon payments of 8% and offers a yield of 3% annually compounded. Suppose that one year later the bond yields at 4%. a) Is it good or bad news for bondholders? Explain b) What return has bondholders earned over the 12-month period? Please provide the details of your calculations and discuss your results. Instead, suppose now that one year later the bond yields at 5.5%. c) Is it good or bad news for bondholders? Explain d) What return has bondholders earned over the 12-month period? Please provide the details of your calculations and discuss your results.
Don't use Excel and pen or paper
A bond is trading at 99.5 with 5.4 years left until maturity. Semi-annual coupon payments are 30.25 and the face value is, as always, 1,000. What is the coupon rate?
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.6% (annual payments). The yield to maturity on this bond when it was issued was 5.7%. What was the price of this bond when it was issued? www When it was issued, the price of the bond was $. (Round to the nearest cent.)
Today, a bond has a coupon rate of 12.1%, par value of $1,000, YTM of 8.20%, and semi-annual coupons with the next coupon due in 6 months. One year ago, the bond's price was $1,281.05 and the bond had 5 years until maturity. What is the current yield of the bond today?
Suppose the coupon rate is 10% issue at par $1000 and for 15 years. Let say the market interest rate decreased to 5% after the bond was issued a) What is the interest payment for this bond annually b) What is the interest payment on semi-annually c) How much should the investors pay for this bondi.e. the value
Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.2% when the market interest rate is 5.2%. You sell the bond one year later after the market interest rate falls to 3.2%. The rate of return earned on the bond during the year was%. (Round your response to two decimal places.)
Toyota just issued ten-year bonds that make annual coupon payments of R50. Suppose you purchased one of these bonds at par value when it was issued. Right after your purchase, market interest rates jumped, and the YTM (interest rate) on your bond rose to six percent. What is the new price of you bond
Yesterday you paid $1000 for a 6% coupon, $1000 face value 5-year bond. It is callable at the end year 1(after it makes the first year-end coupon payment) for $1100. The annual discount rate on this bond has just fallen to 2%. What will this bond be selling for today? If you had intended to hold this bond until it matured, how much money did the call provision cost you in total over all five years?
Komi, Inc. has an 8% semi-annual bond that is priced at $1,060.47. The YTM on the bond is 7%. How many years do these bonds have until they mature? One year later, the yield in the market has fallen to 6 percent. What is the price of the bond now?

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