Which of the following bond has the best value to an investor to t a) A 5 percent coupon bond priced at $1,000 b) A 10 percent coupon bond priced at $1,000 c) A 15 percent coupon bond priced at $1,000 d) A 20 percent coupon bond priced at $1,000 e) A zero-coupon bond priced at $1,000
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- Which of the following $1,000 face-value securities has the highest yield to maturity? A) a 5 percent coupon bond with a price of $600 B) a 5 percent coupon bond with a price of $800 C) a 5.25 percent coupon bond with a price of $1,200 D) a 5 percent coupon bond with a price of $120A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond’s price? b) What is the bond’s duration? c) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield. d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).A four-year bond has an 6 percent coupon rate and a face value of $1,000 . If the bond's current price is $817.75 , calculate the yield to maturity of the bond (assuming annual interest payments). A) 8 percent B) 10 percent C) 12 percent D) 6 percent
- A man invests his savings in two accounts, one paying 6 percent and the other paying 10 percent simple interest per year. He puts twice as much in the lower-yielding account because it is less risky. His annual interest is 6534 dollars. How much did he invest at each rate? Your answer is total in the account paying 6 percent interest is total in the account paying 10 percent interest isif the market interest rate is equal to 5%, should you buy for 900 euros a coupon zero risk free bond that promises to pay 1000 euros in one year?A coupon bond has two years to maturity, a face value of $1000 and a coupon rate of 2%. The yield to maturity is 3%. After one year, the yield to maturity falls to 2%. Find the rate of capital gain for the first year.
- Suppose a 10-year, $1,000 bond with a(n) 11% coupon rate and semiannual coupons is trading for a price of $970.75. 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% APR, what will the bond's price be?A discount interest loan is a loan arrangement where the interest and any other related charges are calculated at the time the loan is closed. Suppose a one-year loan is stated as $10,000 and the interest rate is 14%. Then, the borrower pays $1,400 interest up front, thereby receiving net funds of $8,600 and repaying $10,000 in a year. What is the effective interest rate on this one-year loan?Draw the cash flow diagrams corresponding to the formulas given below. Specify the interest rates and the period in which the X value is calculated. (Note: You are not expected to calculate the X value!) a. X = [300(F/A; %6; 4) - 100 (F/P; %6; 2)1(A/P; %6; 2) b. X = [300(F/A, %10,3)-200(F/G, %10,3)](F/P,%10,1) + [300(F/A,%10,3) + 200(F/G,%10,3)|(P/F,%10,3)
- Question #8: Current Yield [9 Points] A $1000 face-value coupon bond has a current yield of 5.75% and a market price of $1060. What is the bond's coupon rate?Consider a coupon bond that has a $1.000 par value and a coupon rate of 9%. The bond is currently selling for $1,150 and has 9 years to maturity. What is the bond's yield to maturity?You can invest in an account that pays simple interest or an account that pays compound interest. In either case, you plan to invest $2,900 today and both accounts have an annual interest rate of 8 percent. How much more interest will you receive in the 11th year in the account that pays compound interest?