You are considering purchasing a bond that has a $1,000 par value, 5% coupon paid semi-annually, 20 years to maturity. Bonds with similar risk and maturity are now yielding 4%. What is the bond's current market value?
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- Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the rate of return of the bond? What is the yield to maturity of the bond?Suppose you purchase a $1,000 bond with a coupon rate of 8% matures in 5 years at par, and you plan to sell it at the end of 3 years at the prevailing market price. When you purchase the bond, your investment advisor predicts that similar bonds with 2 years to maturity yield at 6%. What is the expected yield to maturity on the bond?What is the duration of the following bond: $1,000 par value, 6% annual coupon, 4 years to maturity, and yield to maturity of 6.5%? You will need your answer for the next question.
- Consider a bond with a principal of $1,000 that pays a coupon of $100 per year. If the bond matures in one year and the current interest rate is i = 3%, what is the price (present value) of the bond? Round to the nearest cent. Answer:suppose you purchase a 30-year Treasury bond with a 5% annual coupon, initially trading at par. In 10 years' time, the bond's yield to maturity has risen to 6% (EAR). (Assume $100 face value bond.) a. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond? b. If instead you hold the bond to maturity, what internal rate of return will you earn on your initial investment in the bond? c. Is comparing the IRRs in (a) versus (b) a useful way to evaluate the decision to sell the bond? Explain. 1. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond? The IRR of the bond is nothing%. (Round to two decimal places.)Suppose you purchase a 30-year Treasury bond with a 5% annual coupon, initially trading at par. In 10 years' time, the bond's yield to maturity has risen to 7% (EAR). (Assume $100 face value bond.) a. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond? b. If instead you hold the bond to maturity, what internal rate of return will you earn on your initial investment in the bond? c. Is comparing the IRRs in (a) versus (b) a useful way to evaluate the decision to sell the bond? Explain. a. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond? The IRR of the bond is %. (Round to two decimal places.)
- You have a risk-free bond with 2 years to maturity. The bond has a face value of $ 1000 and a coupon rate of 5%. The next coupon will be paid one year from now, and the bond pays annual coupons. a. What is the price of the bond? What is its own yield to maturity? Is it trading at a discount or at a premium? b. Suppose you buy the 2-year bond above, and you sell it after one year. What is the expected return on your investment?Kindly solve the question in 10 mins. It is urgent.You are selling a 30-year coupon bond with a par value of $10,000 and a coupon rate of 8% that has 8 years remaining until it matures. If current interest rates are 7%, a. Calculate the price of your bond on the secondary market. b. Calculate your total return. Did you experience a capital gain or loss?Suppose a ten-year bond with a $10,000 face value pays a 5.0% annual coupon (at the end of the year), has 2 years left to maturity, and has a discount rate of 6.5%. Further suppose you purchase this bond, but then, after you purchase it, you discover that the credit (i.e. "default" risk) on the bond has increased. Ceteris paribus, it follows that the present value (i.e. the market price) would and the yield would Select one: O a. increase; decrease O b. increase; increase c. decrease; increase d. decrease; decrease
- Suppose you purchase a zero coupon bond with a face value of $1,000 and a maturity of 25 years, for $233. If the yield to maturity on the bond remains unchanged, what will the price of the bond be 5 years from now?suppose that you have purchased a 3- year zero-coupon bond with face value of $1000 and a price $850. if you hold the bond to maturity, what is your annual return?Suppose you purchase a 30-year Treasury bond with a 6% annual coupon, initially trading at par. In 10 years’ time, the bond’s yield to maturity has risen to 7% (EAR).a. If you sell the bond now, what internal rate of return will you have earned on your investment in the bond?b. If instead you hold the bond to maturity, what internal rate of return will you earn on your investment in the bond?c. Is comparing the IRRs a useful way to evaluate the decision to sell the bond?