Suppose a ten-year, $1,000 bond with an 8.1% coupon rate and semiannual coupons is trading for $1,034.18. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.7% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is%. (Round to two decimal places.)

Suppose a ten-year, $1,000 bond with an 8.1% coupon rate and semiannual coupons is trading for $1,034.18. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.7% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is%. (Round to two decimal places.)

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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(i) Two types of risks faced by bodholders are interest rate risks and default risks? What are interest rate risks and default risks, and why might a bond exhibit more or less of these risks? (ii) You see a bond with the following characteristics: bond matures in 10 years coupon rate = 7% APR compounded semi-annually, paid semi-annually face value = $1000 bond price = $900 What is the yield to maturity (YTM) of this bond, stated as an APR with semi-annual compounding?
1. Consider a bond market where the demand for a particular bond is given by the equatione Bd = 2360 – 0.8P< where Bd is the number of bonds demanded and P is the price of the bond. Suppose the supply of this bond is fixed at 1400. (a) Calculate the price of the bonde (b) Suppose the bond is a consol with an annual coupon of 45. What is the yield on this security?
Consider the following bonds: Bond A B CD с Coupon Rate (annual payments) 0.0% 0.0% 4.3% 7.7% The percentage change in the price of bond A is |___%. (Round to one decimal place.) What is the percentage change in the price of each bond if its yield to maturity falls from 6.9% to 5.9%? The percentage change in the price of bond B is %. (Round to one decimal place.) Maturity (years) 15 The percentage change in the price of bond C is %. (Round to one decimal place.) The percentage change in the price of bond D is %. 21500
Suppose that a one-year, risk-free, zero-coupon bond with a $100,000 face value has an market price of $96,618.36. If you purchased this bond and held it to maturity, what is the yield-to-maturity on your bond? (Hint: use 4 decimal places for your calculations.) A. 1.50% B. 2.49% C. 4.49% D. 5.20% E. None of the above. 2.
A bond sells for $1000 and has a coupon rate of 9.04%. What is the bond's yield?
Given a bond with a coupon rate of 10% semi-annual interest, if the YTM is 11%, which statement is true about this security? A. This bond is trading at a Discount B. This bond is trading at Par. C. This bond is trading at a Premium D. Non of the above.
Suppose a seven-year, $1,000 bond with a 7.9% coupon rate and semiannual coupons is trading with a yield to maturity of 6.71%. a. Is this bond currently trading at a discount, at par, or at a premium? Explain. b. If the yield to maturity of the bond rises to 7.28% (APR with semiannual compounding), what price will the bond trade for? a. Is this bond currently trading at a discount, at par, or at a premium? Explain. (Select the best choice below.) A. Because the yield to maturity is less than the coupon rate, the bond is trading at a discount. B. Because the yield to maturity is less than the coupon rate, the bond is trading at a premium. C. Because the yield to maturity is greater than the coupon rate, the bond is trading at a premium. D. Because the yield to maturity is greater than the coupon rate, the bond is trading at par. b. If the yield to maturity of the bond rises to 7.28% (APR with semiannual compounding), what price will the bond trade for? The new price of the bond is $…
If the current yield of a bond goes down from 6.1% to 4.5%, by what percent does the market price increase?
Suppose you want to figure out the relationship between duration and maturity, so you consider the following three T-Bonds. You compute a. The duration of a two-year Treasury bond with a 10 percent semiannual coupon selling at par b. The duration of a three-year Treasury bond with a 10 percent semiannual coupon selling at par c. The duration of a four-year Treasury bond with a 10 percent semiannual coupon selling at par
Suppose the current price of the bond is $95, the YTM is 4%, and the duration of the bond is 9. If YTM decrease from 4% to 3.9%, approximate the change in price using duration of the bond. Price would increase by ____%
A bond has a Macaulay duration of 12.00 and is priced to yield 10.0%. If interest rates go up so that the yield goes to 10.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down to 9.5%, what will be the bond's percentage change in price? Comment on your findings.
Yield to maturity The relationship between a bond's yield to maturity and coupon interest rate can be used to predict its pricing level. For the bond listed below, state whether the price of the bond will be at a premium to par, at par, or at a discount to par. Coupon interest rate Yield to maturity 10% 8% What is the price of the bond in relation to its par value? (Select the best answer below.) O A. The bond sells at a discount to par. OB. The bond sells at par. OC. The bond sells at a premium to par.

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