The one-year return on a 10-year coupon bond with face value of $10,000 and a 4% coupon rate that initially sells for par is nogu 1. All of the above bns Des 2. b)-3% if interest rates immediately rise from 4% to 5% after the bond is sold 3. c) 12% if interest rates immediately fall from 4% to 3% after the bond is sold 4. d) 4% if interest rates do not change 5. e) None of the above

The one-year return on a 10-year coupon bond with face value of $10,000 and a 4% coupon rate that initially sells for par is nogu 1. All of the above bns Des 2. b)-3% if interest rates immediately rise from 4% to 5% after the bond is sold 3. c) 12% if interest rates immediately fall from 4% to 3% after the bond is sold 4. d) 4% if interest rates do not change 5. e) None of the above

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 spot rates for a zero coupon bond are as follows: 1 year 5% 2 year 5.5% 3 year 6% What is the value of the bond today, its face value is $1000, and pays annual coupons with a rate of 6%
a $1000 face value bond has a 9.0% coupon and pays interest semiannually. The bond matures in 2 yeas and has a yield to maturity of 6.5%. what is the Macaulay duration? *Please show work, DO NOT USE EXCEL*
2. Calculate the price of a bond given the following info: a. Calculate the price of a 6% coupon bond with 3-year maturity and yield 3% face value 1000 b. Calculate (TWO TIMES) the % change in price (from above) and the new dollar price for a bond with the following data: Duration = 8.48 change in ytm = -45 bips AND + 55 bips Old px = $1,000
For a 20-year $1000 par value 8% annual coupon bond that selling at a premium and makes semiannual coupon payments, what of the following is TRUE? O A. The YTM of this bond is below 8%. O B. The price of this bond is below its par value. O C. Because this bond is selling at a premium, it would be worth more than $1000 at maturity. O D. The bond pays $160 in interest every six months.
A 12% bond of Alpha Company with 15 year to maturity is selling in the market for $955, it has a $1,000 par value and pays interest annually. a. Calculate the both bond's yield to maturity (YTM).b. If your required rate of return is 12% would you buy this bond or not.b. Describe the relationship between the coupon rate and yield to maturity and market value of a bond.
Assume that you own a $1 million par value corporate bond that pays 7% in coupon interest (3.5% semiannual ), has 4 years remaining to maturity, and is immediately callable at par. Its current market yield is 7% and it is priced at par. If rates on comparable securities fall by more than 40 basis (0.2% semiannually), the bond will be called(a) Calculate the bonds price if the market rate increases by 50 basis (0.25% semiannually) using the present value formula from(b) Calculate the bonds effective duration assuming a 50 basis - increase or decrease in market rates
please answer
There is a zero coupon bond that sells for $500 and has a par value of $1,000. If the bond has 20 years to maturity, what is the yield to maturity? Assume semiannual compounding. 3.5% 4.5% O 6.5% 5.5%
(c) Re-calculate the prices of the bonds if the required return falls to 9%.(d) Explain how underwriters use the overallotment option in IPOs.
4) A 10 year bond with $50, 000 face value has semiannual coupon rate 4% and semiannual yield rate 2%. Fill out the following amortization table. Principle Outstanding t Payment Interest герaid Balance 1 2 3 12
Fixed Income Securities4. Today is t = 0. You have just bought a five-year zero-coupon Treasurybond with $100 face value. You paid $80.(a) What is the annually compounded yield to maturity on the bond?(b) Suppose that yields at all maturities decrease to 2% immediately after you havepurchased the bond. Calculate the annualized holding period return if you sellthe bond one year after you have purchased it, at t = 1.(c) What is the annually compounded yield to maturity on the bond at t = 1?
3. You are given the following spot rates: Term Spot rate 1 5.00% 2 6.59% 3 6.80% 4 7.00% One year from now, you are considering the purchase of a 3-year zero-coupon bond with a par value of $1,000. What price would you pay for the bond in one year?

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