Two annual coupons bonds both mature in 9 years. Bond A has a coupon rate of 4.00% and a yield to maturity of 8.00%. Bond B has a coupon rate of 8.00% and a yield to maturity of 4.00%.Select one of the following statements that is true about Bond A and Bond B.Bond B is $1297.41 greater than Bond AThe price difference between Bond A and Bond B is $2047.54The price difference between Bond A and Bond B is $547.29Bond A is $750.12 greater than Bond BAll of the Above

Solution:-Bond price means the price at which a bond should trade in the market. It is the summation…

Two annual coupons bonds both mature in 9 years. Bond A has a coupon rate of 4.00% and a yield to maturity of 8.00%. Bond B has a coupon rate of 8.00% and a yield to maturity of 4.00%. Select one of the following statements that is true about Bond A and Bond B. O Bond B is $1297.41 greater than Bond A O The price difference between Bond and Bond B is $2047.54 O The price difference between Bond A and Bond B is $547.29 O Bond A is $750.12 greater than Bond B O All of the Above

Two annual coupons bonds both mature in 9 years. Bond A has a coupon rate of 4.00% and a yield to maturity of 8.00%. Bond B has a coupon rate of 8.00% and a yield to maturity of 4.00%. Select one of the following statements that is true about Bond A and Bond B. O Bond B is $1297.41 greater than Bond A O The price difference between Bond and Bond B is $2047.54 O The price difference between Bond A and Bond B is $547.29 O Bond A is $750.12 greater than Bond B O All of the Above

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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Two annual coupons bonds both mature in 6 years. Bond A has a coupon rate of 8.00% and a yield to maturity of 9.00%. Bond B has a coupon rate of 9.00% and a yield to maturity of 8.00%. Select one of the following statements that is true about Bond A and Bond B. O Bond B is $1046.23 greater than Bond A O The price difference between Bond A and Bond B is $91.09 O The price difference between Bond A and Bond B is $2001.37 Bond A is $955.14 greater than Bond B All of the Above
Give typing answer with explanation and conclusion Bond A pays semi-annual coupons, pays its next coupon in 6 months, and matures in 6 years. Bond B pays annual coupons, pays its next coupon in 1 year, and matures in 10 years. Both bonds have a face value of $1,000.00 and both bonds have the same yield-to-maturity. Bond A has a coupon rate of 12.67 percent and is priced at $921.60. Bond B has a coupon rate of 8.24 percent. What is the price of bond B?
Bond P is a premium bond with a coupon rate of 8.4 percent. Bond D is a discount bond with a coupon rate of 4.4 percent. Both bonds make annual payments, a YTM of 6.4 percent, a par value of $1,000, and have nine years to maturity. a. What is the current yield for Bond P? For Bond D? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Bond P Bond D a. Current yield % % b. Capital gains yield % %
Bond P is a premium bond with a coupon rate of 8.9 percent. Bọnd D is a discount bond with a coupon rate of 4.9 percent. Both bonds make annual payments, have a YTM of 6.9 percent, have a par value of $1,000, and have fourteen years to maturity. a. What is the current yield for Bond P? For Bond D? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.., 32.16.) Bond P Bond D a. Current yield % b. Capital gains yield
Saved Bond P is a premium bond with a coupon rate of 9 percent. Bond D has a coupon rate of 5 percent and is currently selling at a discount. Both bonds make annual payments, have a par value of $1,000, a YTM of 7 percent, and 15 years to maturity. a. What is the current yield for Bond P and Bond D? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P and Bond D? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Bond P current yield a. Bond D current yield b. Bond P capital gains yield b. Bond D capital gains yield
Lantech investor is deciding between two bonds: Bond A pay $72 annual interest and has a market value of $925. It has 10 years to maturity. Bond B pays $62 annual interest and has a market value of $910. It has two years to maturity. Par value of the bonds is $1,000. A. What is the current yield on both bonds? B. Which bond should be chosen and why? C. A drawback of current yield is that is doesn't consider the total life of the bond. E.g. Yield to maturity on Bond A is 8.33 percent. What is the yield to maturity on Bond B? D. Is your answer changed from parts B and C based on which bond should be chosen?
Bond A has a 9% annual coupon, while Bond B has a 7% annual coupon. Both bonds have the same maturity, a face value of $1,000, an 8% yield to maturity, and are noncallable. Which of the following statements is CORRECT? a. If the yield to maturity for both bonds remains at 8%, Bond A's price one year from now will be higher than it is today, but Bond B's price one year from now will be lower than it is today. b. Bond A trades at a discount, whereas Bond B trades at a premium. c. Bond A's current yield is greater than that of Bond B. d. Bond A's capital gains yield is greater than Bond B's capital gains yield. e. If the yield to maturity for both bonds immediately decreases to 6%, Bond A's bond will have a larger percentage increase in value.
A bond has following characteristics: it was issued on 14.06.2018 and has 10 years to maturity. Coupon is paid semi-annually and carries interest rate of 3,2%. Market interest rate is currently 2,9% for similar issues. Investor purchased the bond on 19.11.2021. a. Calculate MacDuration b. Calculate ModDuration c. When market interest rates increase by 50 basis points, calculate price effect using results obtained in question (b)
Bond A has a 7% annual coupon, while Bond B has a 9% annual coupon. Both bonds have the same maturity, a face value of $1,000, and an 8% yield to maturity. Which of the following statements is CORRECT? a) Bond A trades at a discount and Bond B trades at a discount too. b) If the yield to maturity for both bonds remains at 8%, Bond A's price one year from now will higher than it is today, but Bond B's price one year from now will be lower than it is today. c) Bond B trades at a discount, whereas Bond A trades at a premium. O d) Bond A trades at a discount, whereas Bond B trades at a premium. e) Both bonds trade at par value. f) If the yield to maturity for both bonds immediately decreases to 6%, Bond A's bond will have a larger percentage increase in value. g) Bond A trades at a premium and Bond B trades at a premium too.
Consider the four bonds having annual payments as shown in the following table Year Bond A Bond B Bond C Bond D Year 1 100 50 0 0 + 1000 Year 2 100 50 0 0 Year 3 100+1000 50+ 1000 0 + 1000 0 (a) If each of the bonds is traded to produce a 15% yield, determine the price of each bond. (b) If Bond C is sold for $900, what is the yield to maturity? (c) What is the yield to maturity if Bond D is sold for $900?
The following table shows some data for three bonds. In each case, the bond has a coupon of zero. The face value of each bond is $1,000. Bond Price Maturity (Years) Yield to Maturity A $ 230 20 B с 230 17 10% 9 What is the yield to maturity of bond A? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places. Assume annual compounding. What is the maturity of B? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Assume annual compounding. What is the price of C? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Assume annual compounding.
Bond A is a premium bond with a 9 percent coupon. Bond B is a 5 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 6 percent, and have five years to maturity. The face value is $1000 for both bonds. a. Why is the capital gain yield of the premium bond different from that of the discount bond? Which bond is better in terms of yields? b. What is the holding period return for each bond, if both bonds are held over the next year and sold at the year ned?

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