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 7.8% (annual payments). The yield to maturity on this bond when it was issued was 6.3%. What was the price of this bond when it was issued? ... When it was issued, the price of the bond was $1,108.85 (Round to the nearest cent.)

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 7.8% (annual payments). The yield to maturity on this bond when it was issued was 6.3%. What was the price of this bond when it was issued? ... When it was issued, the price of the bond was $1,108.85 (Round to the nearest cent.)

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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1) A 30-year bond was issued 28 years ago. The bond has a face value of $1,000, a coupon rate of 6% and a yield of 5%. Coupons are paid semi-annually. a) What is the price of the bond? b) What is the Macaulay duration of the bond? c) What is the modified duration of the bond? d) If the yield of the bond rises to 5.1%, what is the predicted change in the bond’s price? 2) a) Which is greater: Macaulay Duration or modified duration? b) For a bond with a modified duration of 3 and a price of $1,000, what would happen to the bond’s price if its yield increased by 1 basis point? c) Why does modified duration only provide an approximate change to a bond’s price due to a change in yield to maturity?
A Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the coupon every six months, at the end of each six month period. The price of the bond is $105. What is the yield of this bond? a. 3.65% b. 1.8% C. 1.7% d. 3.8%
Sandhill Company is issuing eight-year bonds with a coupon rate of 6.8 percent and semiannual coupon payments. If the current market rate for similar bonds is 10 percent. Assume face value is $1,000. What will the bond price be? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and bond price to 2 decimal places, e.g. 15.25.) Bond price $ If company management wants to raise $1.25 million, how many bonds does the firm have to sell? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and number of bonds to O decimal places, e.g. 5,275.) Number of bonds
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You purchased a $20,000 bond when there was 17 years to maturity. The bond has a coupon rate of 4.48 %. At the time of purchase the yield to maturity was 2.98%. How much did you pay for the bond? Enter your answer in blank #1. (Round) your answer to 2 decimal places and include the $ sign. Enter your answer in the form $1,234.56.) • Was the bond purchased at a premium or a discount? Enter "premium" or "discount" in blank #2. • What was the amount of premium or discount on the bond? Enter your answer in blank #3. (Round your answer to 2 decimal places and include the $ sign. Enter your answer in the form $1,234.56.) Blank #1 Blank #2 Blank # 3

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