The following is a list of prices for zero-coupon bonds of various maturities.Maturity(years)1234Price ofBond$ 980.90914.97843.12771.76Required:a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annualcoupon payments.b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments.Complete this question by entering your answers in the tabs below.Required A Required BCalculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) fouryears. Assume annual coupon payments.Note: Do not round intermediate calculations. Round your answers to 2 decimal places.Maturity (Years)Price of BondYTM1$980.90%2$914.97%3$843.12%

Year to maturity ( YTM ) represents the total return anticipated on a bond if it is held until its…

The following is a list of prices for zero-coupon bonds of various maturities. Price of Bond Maturity (years) 1 $ 980.90 2 3 4 Required: 914.97 843.12 771.76 a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments.

The following is a list of prices for zero-coupon bonds of various maturities. Price of Bond Maturity (years) 1 $ 980.90 2 3 4 Required: 914.97 843.12 771.76 a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments.

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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7. Bond Valuation: Semiannual Interest Calculate the value of each of the bonds shown in the following table, all of which pay interest semiannually. Bond Par Value Coupon Years to Maturity A $1000 10% B $800 12% C $1000 14% D $1000 8% 13 15 14 11 Required Annual Return 8% 11% 12% 10%
Question 1- Calculate the dollar price of a 7-year bond with a par value of $1,000 that pays a 9.5% coupon semiannually. The yield to maturity is 8.1%. Is the bond trading at a premium or a discount? Select the answer below. # of periods - Coupon Payments - Bond Price- Trading-
What is the price of the bond given the information below. The bond makes semiannual interest payments. (Do not round intermediate calculations, round answer to two decimals, i.e. 32.16) Coupon Rate:8.5% YTM:9.5% Maturity (years):8 Par value: $2,000
Suppose that all bonds have $1,000 of face value. The current prices of zero coupon bonds are as follows: $960 for a one-year bond; $910 for a two-year bond; $850 for a three-year bond. a. What is the price of a three-year bond with 8% annual coupon payment? b. What is the YTM of the two-year zero coupon bond? c. Consider the following two-year bonds: (i) a zero coupon bond as above; (ii) a bond with 6% annual coupon payment. Whose YTM is higher?
Suppose the term structure of interest rate is flat. Consider the following four bonds: Bond Term to Maturity (year) Coupon rate YTM 1 5 10% 7% 2 3 7 7 10% O a. 2,3,4,1 O b. 2,1,4,3 O c. 1,2,3,4 O d. 4,3,2,1 3% 3% 7% 4 7 If the yield-to-maturity for all bonds changes by 1%, rank the bonds from the lowest percentage change in price to the largest percentage change in price based on duration approximation. 7% 5%
7. Suppose a bond is purchased with a settlement date of October 15 and the next coupon payment is on December 1. The par amount purchased on the bond is $100,000, and its annual coupon rate is 4% paid semiannually. (1) What is the accrued interest using the 30/360-day count convention? (2 points) (2) What is the accrued interest using the actual/actual day count convention? (2 points)
The Salem Company bond currently sells for $848.55, has a coupon interest rate of 14%and a $1000 par value, pays interest annually, and has 16 years to maturity. a. Calculate the yield to maturity (YTM) on this bond. b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond.
Three Zero Coupon Bonds (ZCB) are issued on the market. They each have face value of £100 and maturity, respectively, of 1 year, 3 years and 4 years. Assume the first bond is sold for £99.01, the second one for £92.86 and the third one for £88.85. a) Find the annual effective yields of all three bonds. b) (Determine the term structure of forward rates associated with these bonds. c) An investor must pay £1,500 after four years. How much do they need to put aside at the end of the first year, if they decide to invest in the market?
What is the yield to maturity for the following bond: current price is $908, coupon rate is 11 percent, $1,000 par value, interest paid semiannually, eight years to maturity?
Calculate the value of a bond given: Coupon Interest Payments (C) is $50; Capitalization Rate (K) is 17%; Years to Maturity (n) is 5; Par Value at Maturity (P) is $5,000; Compounded Semiannually. 2,539.49 OR 4539.49?
The table below shows the time to maturity for 3 bonds, a 2-year, 3-year, and 5- year. Each annual coupon bond has a yield to maturity of 4.36% and a coupon rate of 3.79%. Estimate the percent change in bonds price to a percent change in one plus the interest rate, assuming a 10 basis point change in the interest rates. Approximate Elasticity Maturity 2-year Bond 3-year Bond 5-year Bond
Question 1 - Calculate the dollar price of a 7-year bond with a par value of $1,000 that pays a 9.5% coupon semiannually. The yield to maturity is 8.1%.Is the bond trading at a premium or a discount? Select the answer below. # of periods - Coupon Payments - Bond Price- Trading-

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