Using the formula given below: F - P Rbonds P if the market price of a $1,000-face-value discount bond changes from $925 to $900, the yield to maturity increases by%. (Round your response to two decimal places.)

Using the formula given below: F - P Rbonds P if the market price of a $1,000-face-value discount bond changes from $925 to $900, the yield to maturity increases by%. (Round your response to two decimal places.)

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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Bond J has a coupon rate of 6 percent. Bond K has a coupon rate of 9 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 3 percent, what is the percentage price change of Bond J? -17.95% -15.97% -16.97% -17.97% If Interest rates suddenly rise by 3 percent, what is the percentage price change of Bond K? -14.82% -16.80% -16.82% 27.26% If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond J? -17.99% 23.11% 23.09% -23.38% If interest rates suddenly fall by 3 percent, what is the percentage price change of Bond K? 21.46% -4.84% 21.34% -16.84%
Suppose that the term structure of interest rates is: t 0.5 1 1.5 2 r 1% 1.2% 1.4% 1.8% Interest rates are annual interest rates that are semi-annually compounded. 1. Calculate the price and modified duration of a 1-year bond with a 6% coupon rate, with coupons paid semi-annually. The bond has a face value of 100.0 2. Calculate the price and modified duration of a 2-year bond with a 10% coupon rate, with coupons paid semi-annually. The bond has a face value of 100.0 3. Compare your results from 1 and 2 above. Which bond is more sensitive to changes in interest rates?
Bond J has a coupon rate of 6 percent. Bond K has a coupon rate of 11 percent. Both bonds have 8 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond J? O-20.85% O-18.85% O-19.85% O-20.83% If interest rates suddenly rise by 4 percent, what is the percentage price change of Bond K? 28.14% O-16.88% O-18.88% Ⓒ-18.86%
Given the following information, what is the approximate convexity measure for the bond if the yield changes by 90 basis points? Coupon rate 5% YTM 7% Maturity (in years) 5 FV $1,000
Suppose a ten-year, $1,000 bond with a 8.9% coupon rate and semiannual coupons is trading for$1,035.32. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.4% APR, what will be the bond's price? The bond's yield to maturity is ______%. (Round to two decimal places.)
Assume that the real risk-free rate is 2.4% and that the maturity risk premium is zero. If a 1-year Treasury bond yield is 5.6% and a 2-year Treasury bond yields 6.3%. Calculate the yield using a geometric average. What is the 1-year interest rate that is expected for Year 2? Do not round intermediate calculations. Round your answer to two decimal places. % What inflation rate is expected during Year 2? Do not round intermediate calculations. Round your answer to two decimal places. % Comment on why the average interest rate during the 2-year period differs from the 1-year interest rate expected for Year 2. The difference is due to the inflation rate reflected in the two interest rates. The inflation rate reflected in the interest rate on any security is the average rate of inflation expected over the security's life. The difference is due to the real risk-free rate reflected in the two interest rates. The real risk-free rate reflected in the interest rate on any security is the…
Using the following information, determine the default risk premium on the 10 year AA corporate bond: Rate % inflation 0.80 T-bill 5.00 10y T-Bond 6.00 10y AAA Corporate 6.48 10y AA Corporate 7.03 note: your answer should be to 2 decimal places. So, if your answer is 3.253%, for example, then enter 3.25 without the percent sign.
K Suppose a five-year, $1,000 bond with annual coupons has a price of $895.56 and a yield to maturity of 6.4%. What is the bond's coupon rate? *** The bond's coupon rate is %. (Round to three decimal places.)
K Suppose a five-year, $1,000 bond with annual coupons has a price of $903.69 and a yield to maturity of 5.6%. What is the bond's coupon rate? The bond's coupon rate is %. (Round to three decimal places.)
2. Consider a 15-year semiannual floating rate bond with coupon rate determined with the following formula: Coupon rate = reference rate + 65bps What’s the discount margin of the bond if the bond price is 99.5730 and current reference rate is 9%?
If the YTM on a bond is 17.5 %, what will be the periodic rate assuming the bond is paying coupons semi-annually? (Write this number as a decimal and not as a percentage, e.g. 0.11 not 11%. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1.234).
Suppose a 10-year, $1,000 bond with a coupon rate of 8.7% and semiannual coupons is trading for $ 1,034.28 a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b If the bond's yield to maturity changes to 9.9% APRwhat will be the bond's price?

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