(Yield to maturity) A bond's market price is $750. It has a $1,000 par value, will mature in 10 years, and has a coupon interest rate of 12 percent annual interest, but makes itsinterest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 20 years? What if it matures in 5 years?

Compound = semiannually = 2 Price of Bond = pv = $750 Face value = fv = $1000 Coupon rate = 12/2 =…

Yield to maturity) A bond's market price is $750. It has a $1,000 par value, will mature in 10 years, and has a coupon interest rate of 12 percent annual interest, but makes its nterest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 20 years? What if it matures in 5 years?

Yield to maturity) A bond's market price is $750. It has a $1,000 par value, will mature in 10 years, and has a coupon interest rate of 12 percent annual interest, but makes its nterest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 20 years? What if it matures in 5 years?

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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A bond with a face value of $1000 and a coupon rate of 10% (paid semi-annually) matures in 10 years from now. The required return (YTM) is 5%. i) Is the bond sold at premium or at discount? Explain. ii) What is the current market price of the bond? iii) Suppose interest rates and the required return for the bond in part ii) change, so that the market price of this bond is now $980. What is the new yield to maturity of this bond? Did the YTM go up or down? Show proper steps of the proof
4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…
An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 10 years, while Bond S matures in 1 year. What will the value of the Bond L be if the going interest rate is 6%, 7%, and 12%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 10 more payments are to be made on Bond L. Round your answers to the nearest cent. 6% 7% 12% Bond L $ $ $ Bond S $ $ $ Why does the longer-term bond’s price vary more than the price of the shorter-term bond when interest rates change? Long-term bonds have lower reinvestment rate risk than do short-term bonds. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. Long-term bonds have greater interest rate risk than do short-term bonds. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. Long-term bonds have…
The present value (price) of a 10 year bond is 938.55 TL if the market quoted yield to maturity is 10%? This bond has a face (par) value of 1,000 TL which is payable annually and matures in 10 years. What is the coupon rate of this bond
(Bond valuation) A bond that matures in 11 years has a $1,000 par value. The annual coupon interest rate is 8 percent and the market's required yield to maturity on a comparable-risk bond is 15 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $__________. (Round to the nearest cent.)
(Bond valuation) A bond that matures in 15years has a $1,000 par value. The annual coupon interest rate is 13 percent and the market's required yield to maturity on a comparable-risk bond is 14 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? The value of this bond if it paid interest semiannually would be $________(Round to the nearest cent.)
A 20 year, at 10% semiannual coupon bond, with a par value of $1000 sells for $1200 (assume that the bond has just been issued today). What is the bond yield to maturity? what is the bond's current yield? what does the bonds capital gain or loss yield if the bond is purchased today and sold next year?b
A bond with 5 years to maturity, a face value of $2,000 and a coupon rate of 8.0% is selling for $1750. What is its yield to maturity? If the yield changes to 8.0%, what will be the new price of the bond? (Assume annual coupon payments.)
A 15-year Treasury bond is issued with face value of $1,000, paying interest of $46 per year. If market yields increase shortly after the T-bond is issued, what is the bond’s coupon rate? (Enter your answer as a percentage rounded to 1 decimal place.) Coupon rate ?%
An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond Y matures in 19 years, while Bond A matures in 1 year. 1. What will the value of the Bond Ybe if the going interest rate is 7%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond A at its maturity and that 19 more payments are to be made on Bond Y. Round your answers to the nearest cent.
A bond that matures in 10 years has a $1,000 par value. The annual coupon interest rate is 8 percent and the market's required yield to maturity on a comparable-risk bond is 13 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? Question content area bottom Part 1 a. The value of this bond if it paid interest annually would be $enter your response here.

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