(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 16 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ the nearest cent.) (Round to

(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 16 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ the nearest cent.) (Round to

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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2:36 a. The value of this bond if it paid interest annually would be $ (Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 15 years has a $1,000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 17 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? ||| = Vol) 1 LTE2 O 4Gl 41% (Round to the nearest cent.)
(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual coupon interest rate is 8 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $__________. (Round to the nearest cent.)
A zero-coupon bond has a $100 face value, matures in 10 years and currently sells for $781.20 . a What is the market’s required return on this bond? b Suppose you hold this bond for one year and sell it. At the time you sell the bond, market rates have increased to 3.5%. What return did you earn on this bond? c Suppose that, rather than buying the 10-year zero-coupon bond described at the start of this problem, you instead purchased a 10-year 2.5% coupon bond. (Assume annual payments.) Because the bond’s coupon rate equalled the market’s required return at the time of purchase, you paid face value ($100) to acquire the bond. Again assume that you held the bond for one year, received one coupon payment, and then sold the bond, but that at the time of sale, the market’s required return was 3.5%. What was your return for the year? Compare your answerhere to your answer in part (b)
What is the yield to maturity on a bond that has a price of $1,600 and pays $100 interest annually for 6 years at the end of which it repays the principal of $1000? Is the bond selling at premium, at par, or at discount? How can you tell?
1.suppose a bond has 4 years to maturity and a coupon rate of 6 percent. the bonds yield to maturity is 8 percent. whats the price of the bond today? assume annual payment only.
b)Assume a 10-year, $1,000 parvalue bond with a 10 percent annual coupon if its required rate of return is 10 percent what is the value of the bond? i) What would be the value of the bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now have a discount or a premium bond? ii) What would happen to the bonds' value if inflation fell, by 3 %? Would we now have a premium or a discount bond?
(Bond valuation) A bond that matures in 15years has a $1,000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 14 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? The value of this bond if it paid interest semiannually would be $________(Round to the nearest cent.)
(Yield to maturity) A bond's market price is $750. It has a $1,000 par value, will mature in 10 years, and has a coupon interest rate of 12 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 20 years? What if it matures in 5 years?
A bond that matures in 20 years has a $1000 par value .The annual coupon interest rate is 14% and the markets required yield to maturity on a comparable-risk bond is 13%. a)What would be the value of this bond if it paid interest semiannually?
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You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 15years. The market's required yield to maturity on a comparable-risk bond is 11 percent. a. Calculate the value of the bond. b. How does the value change if the yield to maturity on a comparable-risk bond (i) increases to 16 percent or (ii) decreases to 6 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 15 years and recalculate your answers in parts a and b. e. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds.

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