Today is 16 December 2021. A pension fund has a $50 million obligation exactly 7 years from now and pays 3% interest (compounded annually) on obligation. Assume that the term structure is flat. How many AAPL and MSFT bonds should the pension fund buy to form a pom that will ensure that the pension fund will meet its obligation in 7 years' time APL bond has a modified duration of 19.85 and MSFT bond has mc uration of 3.65. se the information provided in the table below. Note that the quoted price ean price. Price ($) Yield (%) Par value ($) Modified duration (%) Last coupon date Coupon frequency MSFT 1065.597 3 1,000 3.65 03 May 2021 annually AAPL 967.606 3 1,000 19.85 08 Aug 202 annually

Today is 16 December 2021. A pension fund has a $50 million obligation exactly 7 years from now and pays 3% interest (compounded annually) on obligation. Assume that the term structure is flat. How many AAPL and MSFT bonds should the pension fund buy to form a pom that will ensure that the pension fund will meet its obligation in 7 years' time APL bond has a modified duration of 19.85 and MSFT bond has mc uration of 3.65. se the information provided in the table below. Note that the quoted price ean price. Price ($) Yield (%) Par value ($) Modified duration (%) Last coupon date Coupon frequency MSFT 1065.597 3 1,000 3.65 03 May 2021 annually AAPL 967.606 3 1,000 19.85 08 Aug 202 annually

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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2. The quoted price of a bond with a coupon rate of 4.5%, payable semi-annually, maturing on March 1, 2023, is $990. The last coupon payment was made on March 1, 2019. If you buy the bond on July 1, 2019, what is the total price you must pay for the bond?
Use the following tables to calculate the present value of a $608,000 @ 6%, 6-year bond that pays $36,480 interest annually, if the market rate of interest is 7%. Round to the nearest dollar. Present Value of $1 ¦ Present Value of Annuity of $1 Periods 5 % 6 % 7 % 10 % ¦ Periods 5 % 6 % 7 % 10 % 1 .95238 .94340 .93458 .90909 ¦ 1 .95238 .94340 .93458 .90909 2 .90703 .89000 .87344 .82645 ¦ 2 1.85941 1.83339 1.80802 1.73554 3 .86384 .83962 .81630 .75131 ¦ 3 2.72325 2.67301 2.62432 2.48685 4 .82270 .79209 .76290 .68301 ¦ 4 3.54595 3.46511 3.38721 3.16987 5 .78353 .74726 .71299 .62092 ¦ 5 4.32948 4.21236 4.10020 3.79079 6 .74622 .70496 .66634 .56447 ¦ 6 5.07569 4.91732 4.76654 4.35526 7 .71068 .66506 .62275 .51316 ¦ 7 5.78637 5.58238 5.38929 4.86842 8 .67684 .62741 .58201 .46651 ¦ 8 6.46321…
The stated rate is 5%; the market rate is 4%. The future value of Bonds payable is $1,000. When calculating the PV of the bonds what amount would you use as the annuity or annual payment? $40 $10 E $50 $90 $100
A pension fund has a liability of £65000 to be paid precisely in 4 years time. It wants to Reddington immunise this liability with P 3-year zero coupon bonds and Q 5-year zero coupon bonds, where P and Q are to be determined. Interest is compounded continuously with rate 2%. What is the present value, effective duration and convexity of the liability?
A security pays $55 in one year and $133.10 in three years. Present value of this security is $150. The relevant interest rate is %.
Required: A pension plan is obligated to make disbursements of $2.7 million, $3.7 million, and $2.7 million at the end of each of the next three years, respectively. The annual interest rate is 10%. If the plan wants to fully fund and immunize its position, how much of its portfolio should it allocate to one-year zero-coupon bonds and perpetuities, respectively, if these are the only two assets funding the plan? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Investment in one-year zero-coupon bonds Investment in perpetuity Portfolio do do % %
Suppose a State of North Carolina bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.5%, how much is the bond worth today? $585.43 $614.70 $645.44 $677.71 $711.59
60. A S50,000 municipal bond is being sold. The interest rate is 8% with $2,000 to the bond holder every 6 months. The bond life is 10 years. At that time, the owner will receive the $50,000 back plus the last $2,000 interest payment. If your minimum interest rate is 12% compounded semiannually, what would you pay for the bond? (A) $23,520 (B) $25,630 (C) $38,530 (D) $77,160
Suppose a State of New Jersey bond will pay $1,000 five years from now. If the going interest rate on these 10-year bonds is 4.1%, how much is the bond worth today? 1. $675.79 2. $817.99 3. $628.96 4. $749.39 5. $669.10
a. An 8 ½%, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 4%. Assuming annual interest payments, what should you pay for the bond? b. What should you pay if interest is paid semiannually? c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 4%? Explain the differences in prices changes for (3a) and (3c) in terms of maturity. d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM. е.
Marty Corp is issuing a perpetual bond today that will pay $100 per year starting in 3 years. If the cost of capital is 5%, what is the value of this bond today? Choose the closest. a) $2,000 b) $2,124 c) $1,997 d) $1,814
2. The quoted price of a bond with a coupon rate of 4.5%, payable semi-annually, maturing on March 1, 2023, is $990. The last coupon payment was made on March 1, 2019. If you buy the bond on July 1, 2019, what is the total price you must pay for the bond?

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