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. (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 = 4.07% p.a. and Joan has just received the coupon payment. a. 96.9788 O b. 98.9523 ○ c. 93.8860 ○ d. 97.4573

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. (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 = 4.07% p.a. and Joan has just received the coupon payment. a. 96.9788 O b. 98.9523 ○ c. 93.8860 ○ d. 97.4573

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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On April 1, 2014, Fredriksen Corp. sold a $700 million bond issue to finance the purchase of a new distribution facility. These bonds were issued in $1,000 denominations with a maturity date of April 1, 2034. The bonds have a coupon rate of 8.00% with interest paid semiannually. Required: a) Determine the value today April 1, 2024 of one of these bonds to an investor who requires a 12 percent return on these bonds. Why is the value today different from the par value? b) Assume that the bonds are selling for $925.00. Determine the current yield and the yield-to-maturity. Explain what these terms mean. c) Explain what layers or textures of risk play a role in the determination of the required rate of return on Fredriksen's bonds.
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
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You have decided to invest in Corporate bonds. Your first bond investment (on Jan 2, 2021) is par value $1,000 DEF corporation bond, with a remaining maturity of 5 years, interest is paid semi-annual, the coupon rate is 4% (annual rate) and the effective market interest is 3% (annual rate). Calculate the amount you paid for the DEF bond on January 2, 2021 Calculate the amount of interest you will receive each year from the invest. How much cash will you receive at maturity for the bond?
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
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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
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.]
The Province of Ontario issued a $6000 bond with coupon rate of 9%, redeemable on February 1, 2018. If Julie purchased this bond on October 14, 2010 when the yield was 5% compounded semi-annually, calculate the purchase price of the bond. These steps may be important Step 1: Find previous interest payment date. Step 2: Find price at previous interest payment date

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