Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 1500 Swiss francs (SF). The spot rate is US $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 10 percent. In addition, the SF depreciates to US $0.74074 for SF1. 8. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. Investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g. 32.16)) Loss Gain Answer is complete but not entirely correct. to Swiss investor to US investor (9.74)% 029 %

Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 1500 Swiss francs (SF). The spot rate is US $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 10 percent. In addition, the SF depreciates to US $0.74074 for SF1. 8. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. Investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g. 32.16)) Loss Gain Answer is complete but not entirely correct. to Swiss investor to US investor (9.74)% 029 %

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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You buy an 8-year, 3.30% annual - payment coupon bond priced to yield 5.30 %. You sell the bond at year - end, immediately after receiving the first coupon payment. Assuming the YTM stayed constant over the holding period, what are your capital gains from the sale of the bond? A. -0.09 B. -0.02 C. 0.02 D. 0.09
A 3 - month zero - coupon bond is selling for $99.7 and a 10-year zero - coupon bond is selling for $52.9. Both bonds have a face value of $100. What's the 10-year - 3 - month spread in their yields? Answer in percent, rounded to one decimal place.
A $1,000 bond has a coupon of 4 percent and matures after tên years. ASsume that the bond pays interest annually. a. What would be the bond's price if comparable debt yields 6 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ b. What would be the price if comparable debt yields 6 percent and the bond matures after five years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. c. Why are the prices different in a and b? The price of the bond in a is -Select- v than the price of the bond in b as the principal payment of the bond in a is -Select- v than the principal payment of the bond in b (in time). d. What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after ten years: CY: % YTM: % The bond matures after five years: CY: YTM:
A 8% coupon bond has a par value of $1,000 and a yield-to-maturity of 8%. You purchase the bond when it has exactly 12 years remaining until maturity. You hold the bond for 6 months, collect the coupon payment, and then sell the bond immediately. If the bond's yield-to-maturity is 4% when you sell it, what is your percentage return over this 6-month holding period? Enter your answer as a decimal and show 4 decimal places. For example, if your answer is 6.25%, enter .0625.
you are considering the purchase of a semiannual bond with a 9% coupon rate, it is trading at $875 and matures at $ 1000 in 25 years. What is the coupon payment on this bond?.
In a market where spot rates apply, the two-year forward rate of interest at time t = 1 is 6% per annum effective. The issue price per £100 nominal of a two-year fixed interest bond that pays annual coupons of 4% in arrears and is redeemed at 105% is £95.5. At the same time, the issue price per £100 nominal of a three-year fixed interest bond that pays 6% in arrears and is redeemed at par is £98.5. (i) Calculate all possible annual spot-rates. (ii) Calculate the three-year par yield.
You purchase a bond with an invoice price of $1,034 and a par value of $1,000. The bond has a coupon rate of 8.4 percent, and there are 4 months to the next semiannual coupon date. What is the clean price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Clean price
An investor will pay $2318.63 for an n-year $2,000 par bond with a coupon rate of 10% compounded semiannually or he will pay $2531.05 for an n-year $2,000 par bond with a coupon rate of 11% compounded semiannually. Assuming that the investor gets the same yield on the two bonds, find this yield rate expressed as a nominal rate convertible two times per year. Also find n.
A fixed-income analyst, Sean, observes a 7-year, 8% semiannual-pay bond. the face amount is ¥1,000. He believes that the yield-to-maturity (YTM) on a semiannual bond basis should be 12.29%. Based on this yield estimate, the price of this bond would be A. ¥942.73. B. ¥900.89. C. ¥828.39. D. ¥802.40.
A government bond with 2 years until maturity has a face value of £120,000 and anannual nominal coupon rate of 1%. Assume that the relevant nominal market interestrate (annualized) is equal to 5%. The coupon payments are made every 6 months. Calculate the present value of the bond. Assume the individual coupons are stripped from the bond and soldseparately as zero coupon bonds. Calculate the market value of these zero couponbonds. Assume there are no further changes to the market rate. How would youexpect the price of the bond to evolve? Assume there exist a Callable bond with similar characteristics to thebond described above. Would you expect this Callable bond to have a higher orlower price? Explain why.

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