You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 8.6930%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 8.6930%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.

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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You are considering a 15-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 7.1225%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.
You are considering a 30-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 9.2025%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.
A 5.75 percent coupon bond with 10 years left to maturity is priced to offer a 6.5 percent yield to maturity. You believe that in one year, the yield to maturity will be 5.8 percent. Assuming semiannual interest payments, what is the change in price the bond will experience in dollars? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three-year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: Oa. 6.0% O b. 15.0% Oc. 5.0% O d. 4.0%
You are considering a 10-year, Rs. 1000 par value bond. Its coupon rate is 10% and interest is paidsemiannually. If you require an effective annual interest rate of 8%, how much should you be willingto pay for the bond? Is effective annual interest rate differing from coupon rate? Explain.
An insurance company must make payments to a customer of $10 million in one year and $5 million in five years. The yield curve is flat at 10%. Required: a. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What must be the face value and market value of that zero-coupon bond? Note: Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places. a. Maturity of zero coupon bond b. Face value b. Market value years million million
A bond has a semi-annual coupon payment of $32.4. What is the coupon RATE? Convert to a percent. Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. (NOTE: the coupon RATE is given annually, yet the coupon PAYMENT is semi-annual.) Answer:
You are considering the purchase of a coupon bond with a face value of $1,000, which matures in 14 years, and pays 4.15% (annual) coupons. If you require a return of 3.50% on this instrument, how much would you offer to pay for it today? [Present the answer rounded to two decimal places, e.g. 1035.16]
You have the choice between a convertible bond and a non-convertible bond for investment. Both offer you a coupon rate of 2.5% per year with semi-annual compounding. The remaining maturity for both bonds is 7.5 years. The price for the non-convertible bond is 99.7. Would you pay more or less for the convertible bond? Why?
Suppose that you are interested in purchasing a bond issued by the VPI Corporation. The bond is quoted in the Wall Street Journal as selling for 89.665. How much will you pay for the bond if you purchase it at the quoted price? Assuming you hold the bond until maturity, how much will you receive at that time? If you purchase the bond at the quoted price, you would pay $. (Round to the nearest cent) Assuming you hold the bond until maturity, you would receive $ (Round to the nearest dollar)
You buy a 20-year bond with a coupon rate of 9.6% that has a yield to maturity of 10,5% (Assume a face value of $1,000 and semiannual coupon payments) Six months later, the yield to maturity is 11,5%. What is your return over the 6 months? Note: Do not round mediate calculations. Enter your answer as a percent rounded to 2 decimal places, Negative amount should be indicated by a minus sign.
You are considering buying a semi-annual coupon bond with a stated coupon rate of 8 % (note that the stated rate is in annual terms). There are 10 years to maturity remaining on it. Your required rate of return is 12.4 % per year, How much should you be willing to pay for this bond? (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).

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