The yield curve reveals that the 1-year spot rate is 4.9% and the 2-year spot rate is 7.9%. What is the duration of a 2-year bond with a face value of $1,000.00 making annual coupon payments of 32.9%? Do not report the modified duration. O a. 1.45 O b. 1.78 O c. 1.28 O d. 1.14 O e. 0.98 O f. 1.64 Og. 0.78 Oh. 0.58

The yield curve reveals that the 1-year spot rate is 4.9% and the 2-year spot rate is 7.9%. What is the duration of a 2-year bond with a face value of $1,000.00 making annual coupon payments of 32.9%? Do not report the modified duration. O a. 1.45 O b. 1.78 O c. 1.28 O d. 1.14 O e. 0.98 O f. 1.64 Og. 0.78 Oh. 0.58

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 ask yield on a 6% coupon Treasury bond maturing in 8 years is 5.488%. If the face value is $1000, what should be the QUOTED cost of the bond today (use semiannual compounding)? A. 103:03 B. 103:02 C. 103.27 D. 103:79 E. 103.09
A. Calculate the yield spread of the following floating rate bond: • Annual coupon rate = reference rate + 200 basis points• initial reference rate (annual) = 4%• The bond has a 10-year of term to maturity• Assume the bond’s par value = USD1000• The price of the bond = USD1,032.84 B. Suppose the new reference rate is decreased to 3% two years after the bond is issued. What is the price of the bond then?
Accounting Consider a bond with semiannual coupon payments of $50 and a principal payment of $1,000 in 10 years. Assume a flat yield curve with an 7% vied to maturity: If the yield curve remains unchanged, what is the bond's duration in 9 years? A. 1.00 year B. 1.014 year C. 0.995 year D. 0.983 year E. 0.977 year For a 8-year discount bond with a face value of $1.000. if the interest rate changes from 8% to 12%, what's the new price of the bond using Duration with Convexity? A. $404.87 B. 405.87 C. 406.87 D. 407.87 E. 408.87
Based on your risk assessment, you require an 8% rate of return on ZWT Inc. bond. The term-to-maturity is 20 years and the coupon rate is 59% paid semiannually. The YTM is 12%. What is the current market price of the bond? А. S703.11 В. $535.98 C. $473.38 D. $396.24 E. S834.54
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The yield curve for default-free zero-coupon bonds is currently as follows: Maturity (years) YTM 1 9.8% 2 10.8 3 11.8 Required: a. What are the implied one-year forward rates? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Maturity (years) YTM Forward rate 1 9.8% 2 3 10.8% 11.8% % % b. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will the pure yield curve (that is, the yields to maturity on one- and two-year zero-coupon bonds) be next year? O There will be a shift upwards in next year's curve. O There will be a shift downwards in next year's curve. O There will be no change in next year's curve. c. What will be the yield to maturity on two-year zeros? (Do not round intermediate calculations. Round your answers to 2 decimal places.) YTM % d. If you purchase a two-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint: Compute the current…
What is the coupon rate of a ten-year, $10,000 bond with semiannual coupons and a price of $9,558.57, if it has a yield to maturity of 6.6%? OA. 7.188% OB. 5.99% OC. 4.792% OD. 8.386%
Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 7.9%. What is the duration if the yield to maturity is 11.9%? (Do not round intermediate calculations. Round your answers to 4 decimal places.) YTM 7.9% YTM 11.9% YTM Duration
Provide table solutions
Duration and price sensitivity a) Calculate the duration and modified duration of a bond with a face of $1,000, a 6% coupon rate, and a 5% YTM with 1 payment per year and a maturity of 10 years, using the Excel DURATION and MDURATION formulas. b) Calculate the following: 1. What are the approximate percentage and dollar changes in price for a 1% change in interest rates using the duration approximation formula? 2. What are the actual percentage and dollar changes in price if interest rates increase by 1%?
1
What is the coupon rate if a two-year $10,000 bond with semiannual coupons and a price $9636.67 if it has a yield to maturity of 6.9%? a. 5.909% b. 6.894% c. 4.924% d. 3.939%

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