d.What is the duration of a five-year, $1,000 Treasury bond with a 10 percent annual couponselling at par with a yield to maturity (YTM) of 12%? Please show all the calculations whilecalculating the duration of this bond.Five-year Treasury Bond: Par value = $1,000; Coupon rate = 10%; Annual payments;YTM = 12%

Duration of bond show sensitivity of bond prices to the changes in the interest rate of bond. That…

What is the duration of a five-year, $1,000 Treasury bond with a 10 percent annua selling at par with a yield to maturity (YTM) of 12%? Please show all the calculatic calculating the duration of this bond. Five-year Treasury Bond: Par value = $1,000; Coupon rate = 10%; Annual payments; VTM - 129%

What is the duration of a five-year, $1,000 Treasury bond with a 10 percent annua selling at par with a yield to maturity (YTM) of 12%? Please show all the calculatic calculating the duration of this bond. Five-year Treasury Bond: Par value = $1,000; Coupon rate = 10%; Annual payments; VTM - 129%

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

See similar textbooks

Related questions

Q: A 10-year Circular File bond a. What are its coupon ra Note: Do not round in percent rounded to 2 t…

A: Face value = $1,000Annual interest payment = $70Years to maturity = 10 yearsBond's selling price =…

Q: A 15-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of…

A: Bonds are a form of investment that provides two categories of returns namely periodical coupon…

Q: A bond has 10 years until maturity with a coupon rate of 5% and an annual coupon payment of $50.…

A: Bond value:The bond value refers to the present worth of a bond’s future cash flows, including…

Q: A three-year bond has an 8 percent coupon rate and a $1,000 face value. If the yield to maturity on…

A: Current price of bond is the price which can be paid for purchase of the bond. It is also called…

Q: A$1,000 par value bond with a 9.00% coupon rate (semianual interest) matures in 8 years and…

A: Bond Yield to Maturity (YTM) is a fundamental measure in assessing the potential returns of a bond…

Q: What is the duration of a bond with annual payments of 6% coupon rate, $1,000 par value, 7 years…

A: A bond represents a debt instrument that contains terms and conditions. It also obligates the issuer…

Q: Review the Bond Table below, all bonds have semi-annual payments. Security Coupon Rate Face Value…

A: A bond refers to an instrument used by the issuing organization to raise debt capital from…

Q: the time to maturity for 3 bonds, a 2-year, 3-year, and 5-year. Each annual coupon bond has a yield…

A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…

Q: A 1 year 2% coupon bond has a year to maturity of 9%, while a 1 year 12% coupon bond has a year to…

A: A bond is a debt instrument that promises to pay back the principal along with some interest. Until…

Q: Given the following information, what is the coupon rate of the bond? Years to maturity: 12 Par…

A: Compound = n = Semiannually = 2Time = t = 12 * 2 = 24Face Value = fv = $1000Interest rate = r = 10 /…

Q: Yield to maturity The Salem Company bond currently sells for $684.14, has a coupon interest rate of…

A: Calculation of YTM:

Q: A semiannual-pay bond has 14 years to maturity, a yield to maturity of 5.74 percent and is priced at…

A: Current price of bond is the price which can be paid for purchase of the bond. It is also called…

Q: 1. A bond maturing in 10 years pays annual coupon payment $80 each year and $1,000 upon maturity.…

A: Solution:- Present value of bond means the current price of bond at which it is trading in the…

Q: 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of…

A: A bond is a kind of debt security issued by the government and private companies for raising funds…

Q: Given the following information, what is the coupon rate of the bond? Years to maturity: 12 Par…

A: Step 1: Given Value for Calculation Compound = Semiannually = 2Time = t = 12 * 2 = 24Face Value = fv…

Q: A four-year bond has an 6 percent coupon rate and a face value of $1,000. If the current price of…

A: Yield to maturity is the percentage of return a bond can generate with the periodic and maturity…

Q: Consider a bond with a $1,000 par value, 8% annual coupon, 10 years to maturity, with an interest…

A: Duration of bond = Present value of cash flow/ bond price

Q: Yield to maturity The Salem Company bond currently sells for $1,213.45, has a coupon interest rate…

A: Given Data: Current Price 1213.45Coupon Rate15%Face Value1000Years (NPER)13

Q: A semiannual payment bond with a $1,000 par has a 10% coupon rate, a 6% YTM, and 5 years to…

A: Semiannual coupon amount = $50 (i.e. $1000 * 0.10 / 2)Semiannual maturity period = 10 (i.e. 5 years…

Q: A two-year bond with par value $1,000 making annual coupon payments of $101 is priced at $1,000. a.…

A: A bond is a kind of debt security issued by the government and private companies to the public to…

Q: A bond with 18 years to maturity has an annual interest payment of $30. If the bond sells for its…

A: Let the face value be $1000 therefore price of the bond =$1000 using excel rate function current…

Q: A bond has a yield to maturity (YTM) of 5%, with a maturity of 30 years, the coupon payment is $25…

A: SEMI ANNUAL COMPOUNDING Yield to maturity Years (30*2) 60 coupon amount (PMT) 25 Face…

Q: Analyze the 20-year, 8% coupon rate (semi-annual payment), $1,000 par value bond. The bond currently…

A: Here, Given information Time Period =20 years Semi -annual coupon rate = 8%/2= 4%(As period is semi…

Q: A 5-year bond with 5% coupon rate and P1000 face value is selling for P852.10. Calculate the yield…

A: Given, The coupon rate of bond is 5% The face value of bond is P1000. The selling price of bond is…

Q: Please show proper steps thanks

A: Sure! To find the coupon rate in a mathematical way, we need to solve for the coupon payment using…

Q: A four-year bond has an 4 percent coupon rate and a face value of $1,000. If the current price of…

A: Time = t = 4 YearsCoupon rate = c = 4%Face Value = fv = $1000Current Price of Bond = pv = $757.01

Q: The market price is $925 for a 14-year bond ($1,000 par value) that pays 11 percent annual…

A: Yield to maturity:Yield to maturity refers to the total return an investor can expect to receive…

Q: A Treasury bond that matures in 10 years has a yield of 5.50%. A 10-year corporate bond has a yield…

A: Step 1:We have to calculate the default risk premium on the corporate bond.We know that:Yield on…

Q: A 15-year, 11% coupon bond with semi-annual payment and a par value of $1,000 may be called in 5…

A: Since you have asked a question with multiple parts, we will solve the first parts for you. Please…

Q: A fourteen-year bond has a 10% coupon rate and a face value of $1,000. If the current price of the…

A: Yield to maturity is rate of return which equates the present value of coupon payments and present…

Q: You have the following information regarding an annual bond. What is the modified duration of this…

A: Modified duration of a bond shows the change in the value of the security as the value of the…

Q: Assume that a bond has a current price of $922.32, a coupon rate of 10 percent (pays $50every six…

A: Bonds are debt instruments issued by companies. The issuing company pays periodic interest or…

Q: A 5-year bond has a coupon rate of 6.8% and pays coupons semi-annually. If the required return is…

A: The annual income a bondholder can expect while holding a bond is called the coupon rate. The value…

Q: 2. A 4 year Treasury Bond with a face value of $1,000 and an annual coupon rate of 6.50% had a yield…

A: Bond price refers to the amount at which the bonds are bought and selling in the market among the…

Q: Give typing answer with explanation and conclusion A 20-year maturity bond with par value of $1,000…

A: Bond yield refers to the return an investor expects from the bond per year till the…

Q: Bond Z pays $98 annual interest and has a market value of $870. It has five years to maturity.…

A: Solution Given Annual interest 98 Market value 870 Years to maturity 5 Par…

Q: default

A: Formula: Corporate bond yield spread = Default risk premium + Liquidity premium Corporate bond yield…

Q: A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate…

A: COUPON RATE =10% PAR VALUE = 1000 YEARS TO MATURITY = 20 SEMI ANNUAL COUPON =1000 ×10%2=$50 NO OF…

Q: A 10-year Circular File bond with face value of $1,000 pays interest once a year of $65 and sells…

A: Bond valuation:Bond valuation refers to the process of determining the fair value of a bond, which…

Q: A Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the…

A: The objective of this question is to calculate the yield of a Treasury bond given its face value,…

Q: A Treasury bond that matures in 10 years has a yield of 4.25%. A 10-year corporate bond has a yield…

A: Nominal Treasury Yield is 4.25%Nominal Corpoate Yield is 9.00%Liquidity Premium is 0.70%

Q: A S1, 000 par value bond with a 7.50% coupon rate (semianual interest) matures in 6 years and…

A: Yield to maturity(YTM) is a financial metric offering insight into the anticipated total return…

Q: Consider the following bond where the coupons are paid annually, Bond Scotiabank Price $1008.50…

A: The coupon rate is a percentage of face value that is decided by the bond issuer to pay as interest.…

Q: A three year bond has 8.1% compound rate and face value of P1000. If the yield to maturity on the…

A: Bonds are the securities issued by an entity for raising funds. The payment of these is an…

Q: Annual coupon ($) Bond Price ($) 0 The following table gives the prices of bonds Bond Principal ($)…

A: A bond is a debt security.Usually issued by the Government and the companies to raise debt.In this…

Q: A bond has a 12% coupon rate. The coupon is paid semi-annually and the last coupon was paid 79 days…

A: Information Provided: Coupon rate = 12% The last coupon paid = 79 days Par value = $1000

Q: A 10-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate…

A: Bonds refer to instruments issued by companies to raise debt capital from non-traditional sources.…

Q: What is the yield to maturity for the following bond: current price is $908, coupon rate is 11…

A: Here, Present value (PV) = $908 Maturity value (FV) = $1,000 Coupon rate = 11% Time to maturity (n)…

Question

d.
What is the duration of a five-year, $1,000 Treasury bond with a 10 percent annual coupon
selling at par with a yield to maturity (YTM) of 12%? Please show all the calculations while
calculating the duration of this bond.
Five-year Treasury Bond: Par value = $1,000; Coupon rate = 10%; Annual payments;
YTM = 12%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Calculate the value of a bond given: Coupon Interest Payments (C) is $50; Capitalization Rate (K) is 17%; Years to Maturity (n) is 5; Par Value at Maturity (P) is $5,000; Compounded Semiannually. 2,539.49 OR 4539.49?
A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 12%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places. Omit the "%" sign in your response.) Bond Bond Equivalent Annual Effective Annual Prices Yield to Maturity Yield to Maturity a. $ 950 % % b. $ 1,000 % % c. $ 1,050 % %
A Treasury bond that matures in 10 years has a yield of 4.50%. A 10-year corporate bond has a yield of 9.25%. Assume that the liquidity premium on the corporate bond is 0.25%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. %
A 5-year bond with 10% coupon rate and P1000 face value is selling for P1,054.30. Calculate the yield to maturity on the bond assuming annual interest payments. Use 5 decimal places in your computation Format: 1.11%
A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 9.25%. Assume that the liquidity premium on the corporate bond is 0.60%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. %
A $1,000 par value bond with a 7.50% coupon rate (semianual interest) matures in 7 years and currently sells for $992.66. What is the bond's yield to maturity and bond equivalent yield? The bond's yield to maturity is%. (Round to two decimal places.)
A Treasury bond has a face value of $100, a maturity of 20 years, a coupon of 4%, and pays the coupon every six months, at the end of each six month period. The price of the bond is $105. What is the yield of this bond? a. 3.65% b. 1.8% C. 1.7% d. 3.8%
If the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond is $1,000, and you purchase the bond for $1,250, what is the current yield on the bond? O A. 5 percent. O B. 6 percent. OC. 12.5 percent. O D.8 percent.
Calculate the annual interest that you will receive on the described bond. A $1000 Treasury bond with a current yield of 3.2% that is quoted at 106 points. The annual interest is $$ ? Roudn to the nearest cent
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.)
Bond Valuation1. A 3-year bond with 10% coupon rate and $1000 face value yield to maturity is 8% . Assuming annualcoupon payment, calculate the price of the bond. 2. A 10-year bond with 12.5% coupon rate and $1000 face value yield to maturity is 14.5% . Assumingannual coupon payment, calculate the price of the bond.
Review the Bond Table below; all bonds have semi-annual payments. Security. Coupon Rate Face Value 0.00% $1,000 4.50% $1,000 5.00% $1,000 $1,000 1-yr Treasury 5-yr Treasury 10-yr Treasury 5-yr Corporate (rated A) Multiple Choice 10-year Corporate 8.40% (rated BBB) What is the BBB Default Risk Premium (rdp-BBB)? O O 4.80% 1.75% 2.20% 2.75% 3.40% None of the above Price $ 965.90 $991.18 $976.94 $912.46 $1,000 $1,044.66

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS