yield to An investor is considering a 5-year bond with a face value of $1,000, a coupon rate of 5% paid annually, and maturity of 6%. What is the current market price of this bond?
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- Assume that the yield curve is YT = 0.04 + 0.001 T. (a) What is the price of a par - $1,000 zero - coupon bond with a maturity of 10 years? (b) Suppose you buy this bond. If 1 year later the yield curve is YT = 0.042 + 0.001 T, then what will be the net return on the bond?You want to value a 1,000 par value, 5% coupon bond that makes semiannual interest payments and has 5 years to maturity. Which of the following would be the most appropriate discount rate for this calculation? The yield to maturity, The CAPM nThe weighted average cost of capital . The required return to equity You want to value a $ 1,000 par value?Assume a 1,000 face value bond with 20 years left until maturity. If the coupon rate is 10%, paid semi-annually, and the current yield is 8.85%, what should be the yield to maturity on this bond? Show your work. Please show how to solve using a financial calculator. p/y=2 FV=1,000 n=20*2
- Consider a coupon bond with a face value of $100, a coupon rate of 25%, a time-to-maturity of two years and a price of $121.97. What is its yield-to-maturity?(Use the quadratic formula)You own a bond with an annual coupon rate of 5% maturing in two years and priced at 85%. Suppose that there is a 23% chance that at maturity the bond will default and you will receive only 45% of the promised payment. Assume a face value of $1,000. A. What is the bond’s promised yield to maturity?B.What is its expected yield (i.e., the possible yields weighted by their probabilities)?Consider a coupon bond with a face value of $100, a coupon rate of 10%, a time-to-maturity of three years and a price of $119.80. What is its yield-to-maturity?Hint: Solve numerically using a scientific calculator or Excel
- You own a bond with an annual coupon rate of 5% maturing in two years and priced at 85%. Suppose that there is a 23% chance that at maturity the bond will default and you will receive only 45% of the promised payment. Assume a face value of $1,000.A. What is the bond’s promised yield to maturity?B. What is its expected yield (i.e., the possible yields weighted by their probabilities)Suppose we want to purchase a Company XYZzero-coupon bond that has a $1,000 face valueand matures in three years, and we would like toearn a yield of 10% per year on this investment.How much shall we pay for this bond?– Hint: Coupon bond or Zero-coupon bond?Conceptually good pls
- How much would you pay for a zero coupon bond with a par value of $1000, a maturity of 21 years, if your required rate of return is 6.1%? Assume annual discounting. (Round your answer to the nearest penny.)Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $89.75, while a 2-year zero sells at $79.88. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 10% per year. Required: What is the yield to maturity of the 2-year zero? What is the yield to maturity of the 2-year coupon bond? What is the forward rate for the second year? If the expectations hypothesis is accepted, what are (1) the expected price of the coupon bond at the end of the first year and (2) the expected holding-period return on the coupon bond over the first year? Will the expected rate of return be higher or lower if you accept the liquidity preference hypothesis?Assume the following yield to maturities: one year YTM 6%, two year YTM 7%, and three year YTM is 5%. A) What is today’s price of a three year zero coupon bond, 1000 par?