Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) 7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information

Sara has one share of stock and one bond. The total value of the two securities is $1,123.21. The stock pays annual dividends. The next dividend is expected to be $14.95 and paid in one year. In two years, the dividend is expected to be $13.42 and the stock is expected to be priced at $299.76. The stock has an expected return of 13.82 percent per year. The bond has a coupon rate of 6.20 percent and a face value of $1,000; pays semi-annual coupons with the next coupon expected in 6 months; and matures in 17.5 years. What is the YTM of the bond? O7.68% (plus or minus 4 bps) 3.79% (plus or minus 4 bps) 7.57% (plus or minus 4 bps) 8.35% (plus or minus 4 bps) the answer cannot be obtained based on the given information

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

Last year Janet purchased a $1,000 face value corporate bond with an 7% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 13.49%. If Janet sold the bond today for $1,116.11, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. ___%
Assume that Peter purchased a 25-year, 7.24 percent coupon (annual payments) bond at par ($1,000). He sold the bond after 4 years for $1,095.55. He reinvested the coupon payments at the 4.75 percent compounded annually. Calculate the bond's total yield.
Singtel recently issued a graded investment bond. The bond has a $1,000 par value which will mature in 12 years’ time. It has a coupon interest rate of coupon of 11% and pays interest annually. As an investor, you are to determine the following: i. Calculate the value of the bond if the required rate of return is 11 percent. ii. Calculate the value of the bond if the required rate of return is 15 percent. iii. Based on the above findings in part (i) and (ii) above, and discuss the relationship between the coupon interest rate on a bond and the required return and the market value of the bond relative to its par value. iv. Identify two possible reasons that could cause the required return to differ from the coupon interest rate.
Jacob purchased a bond for $880 with a 9% coupon. He sold the bond after one year when it was paying him a current yield of 10%. What is the holding period return? 9.0% 9.5% 10.0% 11.0% 12.5%
John bought a 10-year, 1,000 par value bond with 8% semiannual coupons. The price of the bond to earn a yield of 9% convertible semiannually is 1,038.62. Find the redemption value. (Round to the nearest integer value.)
The nominal rate of return is % earned by an investor in a bond that was purchased for $951, has an annual coupon of 9%, and was sold at the end of the year for $1020? Assume the face value of the bond is $1,000.
Carol plans to invest in a 12 year bond issued by Iris Ltd that pays a coupon of 4.8 percent. Coupon payments are made semi-annually. If the current market rate is 6.4 percent, what is the maximum amount Carol should be willing to pay for this bond? Assume it has a par value of $1000.
Linda is interested in purchasing a corporate bond that was issued with an 8% annual coupon a semiannual interest payment of $40, and maturity in fifteen years. What is the par value of this bond?
(6) Maureen purchased a laddered portfolio of par-value bonds with semiannual coupons for $20,918. The bonds had common face amount X and coupon rate 6.8%. There was one bond redeemable at the end of each year for ten years. Maureen's yield on the portfolio was an annual effective rate of 8%. Find X.
The project of the sister company is 7.000.000 TL. The company will earn 3.7 million TL in the first year from this project and for 15 years, and this amount will continue to decrease by 350,000 TL each year. If interest=30%, should this project be entered?
Jenna bought a bond that was issued by Sherlock Watson Industries (SWI) three years ago. The bond has a $1,000 maturity value, a coupon rate equal to 9%, a market rate (yield to maturity) of 10%, and it matures in 17 years. Interest is paid every six months; the next interest payment is scheduled six months from today.
Sara owns one bond A and one bond B. The total value of these two bonds is $1,860.00. Bond A pays semi-annual coupons, matures in 12 years, has a face value of $1,000.00, and pays its next coupon in 6 months. Bond B pays annual coupons, matures in 3 years, has a face value of $1,000.00, has a yield-to- maturity of 10.64 percent, and pays its next coupon in one year. Both bonds have a coupon rate of 9.30 percent. What is the yield-to-maturity for bond A? O 10.54% (plus or minus 2 bps) O 10.92% (plus or minus 2 bps) O 5.92% (plus or minus 2 bps) O 8.87% (plus or minus 2 bps) O none of the answers are within 2 bps of the correct answer

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