Answered: Suppose a U.S. government bond promises…

Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on 3-year government bonds is 4%, how much is the bond worth today? PV = FV,/(1 + 1N

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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The Time Value of Money. 2.1-2.2: The U.S. government has a consol bond which pays $100 per year forever. Assume the current interest rate is 3% per year. 2.1 What is the value of the consol bond immediately after a payment is made?- 2.2 What is the value of the consol bond immediately before a payment is made?- w ww w
Vv
During a period of severe inflation, a bond offered a nominal HPR of 87% per year. The inflation rate was 78% per year. a. What was the real HPR on the bond over the year? (Round your answer to 2 decimal places.) Real HPR % b. Find the approximation rreal ľnom i. Approximation %
1. For the following assume US bond make semi-annual coupon payment, while the rest of the world make annual coupon payments. a. Price a German government Zero-Coupon bond with ten years to maturity and yield 5%. b. Price a US Treasury Zero-Coupon bond with six months to maturity and yield 4% (US bond assume semi-annual compounding. c. Price a US Treasury Zero-Coupon bond with two years to maturity and yield 4.2%. d. Price a US Treasury Zero-Coupon bond with three and a half years to maturity and yield 4.4%.
(YTM, semiannual payments) On 15 August 1990, the U.S. Treasury issued a bond maturing on 15 February 2020. The bond has a coupon rate of 8.75%, payable semi - annually on 15 February and 15 August. If on 22 June 2015 a $100 face value bond is selling for $138.89, what is the bond's yield to maturity
Suppose a state of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bond is 6.4%, how much is the bond worth today?
You will receive $100 from a savings bond in 4 years. The nominal interest rate is 7.90 %. a) What is the present value of the proceeds from the bond? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b) If the inflation rate over the next few years is expected to be 2.90%, what will the real value of the $100 payoff be in terms of today's dollars? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c)What is the real interest rate? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. d)Calculate the real payoff from the bond [from part (b)] discounted at the real interest rate [ from part (c)]. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Compute how much interest a company would pay in 2023 on a 5-year, $500,000+U dollar loan (which it takes out today and has all principal due in 2028) that has an interest rate contractually set to equal 2.50% above the 1-year Treasury bond yield on June 15 each year if that specified T-bond rate turns out to be 9.23% on June 15, 2023. U=44
13. If a bond has a face value of Euro 10,000 and a coupon rate of 10% what would the coupon payment be on a semi-annual basis? A. 5,000 B. 50 C. 500 D. 1,000
Use a bankers year: 360 T-bills (Treasury bills) are one of the instruments the U.S. Treasury Department uses to finance public debt. If you buy a 200-day T-bill with a maturity value of $17,750 for $17,564.46, what annual simple interest rate will you earn? Express your answer as a percentage.
You will receive $1000 from a savings bond in3 years from now. The nominal interest rate is 8% and the rate of inflation is 2%. What is the real value of the $1000 that you receive 3 years from now in terms of today's dollars?
A 20-year government coupon bond has a face value of $1,000 and a coupon rate of 6% paid annually at the end of each year. Assume that the market interest rate is 8% per year. What is the bond’s PV? (You can sum the PVs for each of the coupon payments and the final $1,000, or you can use the annuity formula in the text, at p. 103, to calculate the PV of the coupon payments and save some work. If you use the annuity formula, be sure to add the PV of the final $1,000 payment to the annuity result.) Round your answer to the nearest dollar (XXX). Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.

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