Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2015 to create this portfolio and this portfolio is composed of 201 units of instrument A and 429 units of instrument B. Instrument A is a zero - coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. Instrument B is a Treasury bond with a coupon rate of j2 = 2.96% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024. (b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j2 = 3.71% p.a. and Joan has just received the coupon payment. Question 6 a. 99.7050 b. 98.2250 c. 97.8891 d. 94.5750

Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2015 to create this portfolio and this portfolio is composed of 201 units of instrument A and 429 units of instrument B. Instrument A is a zero - coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. Instrument B is a Treasury bond with a coupon rate of j2 = 2.96% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024. (b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j2 = 3.71% p.a. and Joan has just received the coupon payment. Question 6 a. 99.7050 b. 98.2250 c. 97.8891 d. 94.5750

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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Leah is considering repositioning some of the investments in her bond portfolio. Of the bonds shown below which one has the longest duration and is therefore most sensitive to interest rate changes. Assume that they are all purchased this year and current interest rates are 6.2% Bond A: 6.25% coupon Treasury bond with a current price $1,050 that matures in 2030 Bond B: Zero coupon Treasury bond with a current price $789 that matures in 2030 Bond C: 4.01% AA corporate debenture with a current price $949 that matures in 2030 Bond A Bond B Bond C O They all have the same duration
It is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1, 2019. It has an 8.5% annual coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until December 31, 2023), after which time it can be called at 108—that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 116.57% of par, or $1,165.70. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. % What is the yield to call? Do not round intermediate calculations. Round your answer to two decimal places. % If you bought this bond, which return would you actually earn? Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. Investors would expect…
It is 2018 and Charles is thinking about buying an Australian Treasury bond with a coupon rate of j2 = 3.17% p.a. and a face value of $100. The maturity date of the bond is 15 May 2033. If Charles purchased this bond on 5 May 2018, what was his purchase price (rounded to four decimal places)? Assume a purchase yield of j2 = 4.48% p.a. a. $87.62 b. $87.2829 c. $85.6981 d. $87.2812
Today is 1 July, 2019. Siobhán has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Siobhán purchased all instruments on 1 July 2012 to create this portfolio, which is composed of 34 units of instrument A and 28 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of J₂=4.18% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current duration of Siobhán's portfolio using a yield to maturity of j₂=4.52% p.a. Express your answer in terms of years and round your answer to two decimal places. O a. 5.23 years b. 7.00 years O c. 5.56 years O d. 6.49 years
Consider a zero-coupon bond issued on 1st of March 2017 with maturity in two years and face value £100 (a) Compute the price on the 1st of March 2017 if the gross yield is 4% p.a. effective. (b) If the bond is issued at a price of £90 and pays capital gains tax at 25%, find the net redemption yield.
Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2017 to create this portfolio and this portfolio is composed of 385 units of instrument A and 334 units of instrument B. • Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. • Instrument B is a Treasury bond with a coupon rate of j₂ = 2.99% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024. (a) Calculate the current price of instrument A per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j₂ =4.07% p.a. a. 60.4325 b. 50.7535 O c. 59.2273 O d. 71.0009
a. Today is 1 July, 2019. Latha has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Latha purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 35 units of instrument A and 21 units of instrument B. Question 8Answer b. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2 = 4.87% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is /2 = 3.25% p.a. and Hélène has just received her coupon payment. $106.2948 d. $104.5951 $103.8598 $113.1500
Today is 1 July, 2019. Siobhán has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Siobhán purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 21 units of instrument A and 41 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of J2=4.05% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current duration of Siobhán's portfolio using a yield to maturity of j2=4.6% p.a. Express your answer in terms of years and round your answer to two decimal places. a. 5.73 years O b. 4.19 years O c. 4.17 years O d. 6.38 years
Questions 9-11 are related and share the same information: It is May 18. 2017. You have a 510,000 semi-annual bond with a coupon rate of 10.375% which matures May 5, 2044. The bond is priced to yield 13.500%, the duration is 7.81 years, and the convexity is 99.87 years squared. Using a duration estimate only, we predict that if market yields increase by 50 basis points then the price of this bond will decrease by % (percent. rounded three places after the decimal) QUESTION 10 The convexity correction is calculated as % (percent. rounded three places after the decimal) (refers to the above problem statement) QUESTION 11 So the total decrease in price is predicted to be % (percent. rounded three places after the decimal) (refers to the above problem statement)
Today is 1 July, 2019. Katrina has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Katrina purchased all instruments on 1 July 2011 to create this portfolio, which is composed of 28 units of instrument A and 44 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2 = 2.16% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument A per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 4.03% p.a. O a. $47.2049 O b. $48.7635 O c. $49.7461 O d. $68.4516
Crazy Racoon Fur Trading Company issued a 20-year bond on May 15, 2018 with a 6.00% coupon. The bond pays interest semi-annually (5/15 and 11/15) with no special covenants (puts, calls, etc.). The bond will pay off at par (100.00%) or face value at maturity. You decide to purchase the bond and the trade is going to settle on August 30, 2020. On that date.... a. What is the price of the bond if the yield to maturity is 6.00%? b. What is the price of the bond if the yield to maturity increases to 7.00%? c. What is the price of the bond if the yield to maturity falls to 5.00%? Settlement date 08/30/20 Maturity date 05/15/22 Annual coupon rate 6.000% Yield to maturity 6.000% Redemption value as % of par valu 100.00 Number of coupons per year 2 BOND PRICE CALCULATOR $1,000.00 $1,000.00 CORRECT! $981.19 $962.89
On February 9, 2015, Hunter-Gratzner, Inc. issued a 10 year bond (with a typical $1000 face value) that had an annual coupon value of $42. We will assume that the 2022 coupon has just been redeemed. Initially (in 2015), the bond was sold at the premium price of $1,037. On February 9, 2022, this bond was selling for $972. The market rate of interest for a riskless corporate bond, of this maturity (i.e., a U.S. Treasury security), was 1.75% on February 9, 2015, which reflected market expectations about future rates of inflation. The market rate of interest for a riskless corporate bond, of this maturity (i.e., a U.S. Treasury security), was 2.05% on February 9, 2022, which reflects market expectations about future rates of inflation. Question: What was the yield to maturity for this bond on February 9, 2015? [To 2 decimal places.]

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