Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 1.8% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j₂ = 11.9% p.a. Assume that this corporate bond has a 5% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places. O a. $78.509 O b. $79.790 O c. $61.241 O d. $55.718

Today is 1 July, 2022, Georg plans to purchase a corporate bond with a coupon rate of j2 = 1.8% p.a. and a face value of $100. This corporate bond matures at par. Its maturity date is 1 January, 2025. The yield rate is assumed to be j₂ = 11.9% p.a. Assume that this corporate bond has a 5% chance of default in any six-month period during its term. Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to three decimal places. O a. $78.509 O b. $79.790 O c. $61.241 O d. $55.718

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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To calculate the number of years until maturity, assume that it is currently January 15, 2022. All of the bonds have a $2,000 par value and pay semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Williams Company (WICO) Coupon 5.400 4.125 ?? a. Price b. Current yield Maturity January 15, 2034 January 15, 2029 January 15, 2031 % Last Price Last Yield 92.685 ?? 3.84 ?? 104.310 4.12 Estimated $ Volume (000s) 57,362 a. What price would you expect to pay for the Kenny Corporation bond? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the bond's current yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 48,941 43,802
You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2,000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Williams Company (WICO) Coupon 6.300 7.210 ?? a. Price b. Current yield Maturity January 15, 2043 January 15, 2037 January 15, 2039 % Last Price Last Yield 94.291 ?? 6.20 ?? 94.825 7.02 Estimated $ Volume (000s) 57,371 a. What price would you expect to pay for the Kenny Corporation bond? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the bond's current yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 48,950 43,811
You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2,000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Williams Company (WICO) Yield to maturity Coupon 6.60 7.24 ?? % Maturity January 15, 2045 January 15, 2039 January 15, 2041 Last Price Last Yield 94.327 ?? ?? 6.26 94.855 7.08 What is the yield to maturity for the bond issued by Xenon, Incorporated? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Estimated $ Volume (0005) 57,374 48,953 43,814
Loïc is planning to purchase a Treasury bond paying a (₂) coupon rate of 5.93% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Loïc purchased this bond on 5 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 8.5% p.a., compounded half-yearly. Loïc needs to pay 28.3% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half-year. O a. $64.0343 O b. $82.7153 O c. $66.4072 O d. $60.3125
You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2,000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Williams Company (WICO) Coupon 7.200 7.300 ?? a. Price b. Current yield Maturity January 15, 2039 January 15, 2033 January 15, 2035. % Last Price Last Yield 94.399 ?? ?? 6.38 94.915 7.20 Estimated $ Volume (000s) a. What price would you expect to pay for the Kenny Corporation bond? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. What is the bond's current yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 57,380 48,959 43,820
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You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2022. The bonds have a par value of $2,000 and semiannual coupons. Company (Ticker) Xenon, Incorporated (XIC) Kenny Corporation (KCC) Williams Company (WICO) Coupon rate Coupon 7.000 7.280 ?? % Maturity January 15, 2041 January 15, 2035 January 15, 2037 Last Price Last Yield 94.375 ?? 94.895 ?? 6.34 7.16 Estimated $ Volume (000s) 57,378 What is the coupon rate for the Williams Company bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. 48,957 43,818
A corporate bond with a coupon rate of 6% pays interest semiannually and has a maturity date of May 28, 2030. The trade settles on March 20, 2023. The yield to maturity is 13%. What is the flat (or clean) price of the bond (in percent of par) on the settlement date? Use Excel's PRICE() function. Dates must be entered with Excel's DATE() function.
A bond that settles on June 7, 2022, matures on July 1, 2042, and may be called at any time after July 1, 2032, at a price of 180. The coupon rate on the bond is 6.4 percent and the price is 196.00. What are the yield to maturity and yield to call on this bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
A 4% semi-annual govt bond is maturing March 10, 2024. Accrued interest on this bond uses the 30/360 day-count convention. The coupon payments are made on 10 March and 10 Sept of each year. The bond is to be priced for settlement on 25 April 2019. Yield = 6% (Assume Par value of 100). Compute Full Price?
A 15-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 6%. Required: a. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.) b. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,000. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,040. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
A two-year bond with par value $1,000 making annual coupon payments of $106 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.6%, (b) 10.6%, (c) 12.6%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

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