You just purchased a bond that matures in 12years. The bond has a face value of $1,000 and an3.5% semi-annual coupon. The bond has acurrent yield of 5.62 %. What is the bond's yield tomaturity?

Given information: Face value (FV) = $1,000 Current Yield = 5.62% Coupon rate (CR) = 3.5% Annual…

Answered: You just purchased a bond that matures…

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

See similar textbooks

Similar questions

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.
You own a bond that pays $100 in annual interest, with a $1,000 par value. It matures in 15years. The market's required yield to maturity on a comparable-risk bond is 11 percent. a. Calculate the value of the bond. b. How does the value change if the yield to maturity on a comparable-risk bond (i) increases to 16 percent or (ii) decreases to 6 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 15 years and recalculate your answers in parts a and b. e. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds.
You own a bond with a coupon rate of 6.4 percent and a yield to call of 7.3 percent. The bond currently sells for $1,087. If the bond is callable in five years, what is the call premium of the bond?
A corporate bond pays interest annually and has 3 years to maturity, a face value of $1,000 and a coupon rate of 3.7%. The bond's current price is $997.21. It is callable at a call price of $1,050 in one year. What is the bond's yield to maturity? What is the bond's yield to call?
Suppose you purchase a 10-year bond with 6.3% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.6% when you purchased and sold the bond, A)What cash flows will you pay and receive from your investment in the bond per $100 face value? B)What is the annual rate of return of your investment?
A bond that matures in 12 years has a $ 1000 par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on a comparable-risk bond is 16 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?
you are interested in a corporate bond with a current market price of $973.36 and yield to a maturity of 7%. the bond carries a coupon rate of 6%, paid semi annually. if you buy the bond today, how many semi- annual coupon payments will you receive until the final maturity?
Suppose you have a 10-year bond (the bond will mature in 10 years), with a coupon rate of 2.45%. Coupons are paid on a semi-annual basis. The face value of the bond is $1000. Suppose the bond's yield to maturity suddenly increases from 2.13% to 2.63%. What is the impact on the price of the bond in percentage terms? Justify all of your response.
Suppose an investor has a 5-year investment horizon. He purchased an 8-year paying an 8% annual coupon rate while the bond's initial annual yield to maturity is 6%. The bond makes coupon payments semi-annually. The investor expects that he can reinvest the coupon at an annual interest rate of 7%. At the beginning of year 6, he expects the then yield to maturity to be 7%. What is the total return for this bond?
A bond with 16 year to maturity and a semiannual coupon rate of 4.93 percent has a current yield of 5.29 percent.The bond's par value $2,000.What is the bond's price

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

You just purchased a bond that matures in 12 years. The bond has a face value of $1,000 and an 3.5% semi-annual coupon. The bond has a current yield of 5.62 %. What is the bond's yield to maturity?