You bought one of Great White Shark Repellant Company's 11 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 10 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 13 percent. If the inflation rate was 36 percent over the past year, what was your total real return on investment? Multiple Choice O O O 28.09% 19.44% 20.31% O 6.23% O 19.34%

You bought one of Great White Shark Repellant Company's 11 percent coupon bonds one year ago for $810. These bonds make annual payments and mature 10 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 13 percent. If the inflation rate was 36 percent over the past year, what was your total real return on investment? Multiple Choice O O O 28.09% 19.44% 20.31% O 6.23% O 19.34%

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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Bond X has 20 years to maturity, a 8% annual coupon, and a R 1,000 face value. The required rate of return is 12%. Suppose you want to buy the bond and you plan to hold the bond for 6 years. You expect that in 6 years, the yield to maturity on a 15-year bond with similar risk will be priced to yield 8.5%. How much would you like to pay for the bond today?
You wish to sell a bond that has a face valueof $5,000. The bond bears an interest rate of 7.5%,which is payable quarterly. Six years ago, the bondwas purchased at $4,800. At least a 9% annual returnon the investment is desired. What must be the minimum selling price of the bond now in order to makethe desired return on the investment?
Give typing answer with explanation and conclusion
If investors holding our 4-year bonds (Bond #1) receive interest income annually forfour years, plus the face value of the bonds at maturity,a. If the expected rate of return on our bonds is 10%, what is the duration ofBond #1? Given the following projected income stream for Bond #1: year coupon interest face value 1 100 2 100 3 100 4 100 1,000 total income in yeear 4 400 1,000
1. You are selected as an analysis to manage a fixed income portfolio for a client in particular a corporate bond. You are considering a 3-year floating rate note with 1 year benchmark rate of 2.88%. It is priced at 685 of 1000 par value. Your analysis tells you probability of default is approximately 40%. If the issue survives over the next three years due to the industry it is in. The probability of default for each year is 9% and a volatility of 12%. What is the price of the bond?
A4 3 You bought one of BB Co.’s 10% coupon bonds one year ago for $1100. These bonds make annual payments, have a face value of $1000 each, and mature seven years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8%. If the inflation rate was 3% over the past year, what would be your total real return on investment according to the Exact Fisher Formula?
You purchased a zero coupon bond one year ago for $120.36. The bond has a par value of $1,000 and the market interest rate is now 13 percent. If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year? Assume semiannual compounding.
Today you buy ten zero-coupon bonds which will mature in exactly 5 years. Each of these ten bonds has a face value of $100. The price you pay today for each of these bonds is $82. Assume a year goes by. Now there are only 4 years left before these bonds mature. You sell these bonds in the market for $75 per bond. What is the return you have realized on your investment in these bonds? -7.00% -9.26% -8.54% We do not have sufficient information about interest rates to calculate this answer. -9.33%
You Answered orrect Answer A company is promising a coupon payment of $46 in 2.03 years. A risk free government bond of the same maturity is yielding 1.66% per year. The credit spread for the promised payment by the company is 1.24% per year. Both the yield and the spread are stated on a continuously compounded basis. What is the present value of the expected loss on the promised payment? 1.11 margin of error +/-50
What's the value to you of a $1,000 face-value bond with an 12% semi-annual coupon rate and 7 years to maturity when your required rate of return is 10 percent?
I would like to understand how to solve this in Excel. Hardware Inc. bonds are selling in the market for $960.45. These bonds carry a 9 percent coupon paid semiannually, and have 15 years remaining to maturity. What is the capital gain yield assuming that the interest rates will remain constant over the year?
Baghiben

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