You need to borrow $206616 to buy a house today. If the bank offers you 3.14% APR per year, what is your monthly mortgage payment if the mortgage is for 30 years? QUESTION 2 NBCUniversal Media has a bond outstanding that matures in 17 years. If its market price is $1173 42 and it yields 8 88%, what is the bond's coupon rate? Enter as a decimal and provide at least four decimal places (0. 1234 not 12 34%)

You need to borrow $206616 to buy a house today. If the bank offers you 3.14% APR per year, what is your monthly mortgage payment if the mortgage is for 30 years? QUESTION 2 NBCUniversal Media has a bond outstanding that matures in 17 years. If its market price is $1173 42 and it yields 8 88%, what is the bond's coupon rate? Enter as a decimal and provide at least four decimal places (0. 1234 not 12 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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3. Suppose that you observe the following two bonds being traded, both of which pay coupons annually and have a $100 face value: Bond Coupon Maturity Rate A B 6% 2% 30 years 30 years Price $147.13 $64.47 If the Law of One Price holds, what is the price of a 30-year Annuity that pays $8 per year starting at t = 1?
Which will you prefer to invest your $1,50O: a) a two year bond with interest rate of 9 percent or b) two one year bonds, Year 1, the bond will earn 8% and year 2 the second bond will earn 9%. Which bond will you buy?
You will be paying $12,800 a year in tuition expenses at the end of the next two years. Bonds currently yield 8% Required: a. What are the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places) Present value Duration Answer is complete and correct. S 22.825 79 14000 years b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration to 4 decimal places and "Future redemption value to 2 decimal places.) Duration Future redemption value Answer is not complete. 14800 years
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You will be paying $12,200 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%. Required: a. What are the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.) c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately increase to 10%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Suppose you buy a zero-coupon bond with value…
The U.S. Treasury offers to sell you a bond for $585.43. No payments will be made untilthe bond matures 10 years from now, at which time it will be redeemed for $1,000.What interest rate would you earn if you bought this bond for $585.43? What ratewould you earn if you could buy the bond for $550? For $600? (5.5%, 6.16%, 5.24%)
You are thinking about buying a savings bond. The bond costs $54 today and will mature in 7 years with a value of $108. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)
Q) An $6,000 face-value bond matures in four (4) years and pays 6% per year payable Semiannually An investor wants a 10% return per year compounded Semiannually. How much should the investor pay for the bond? Explain it correctly.
You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? a. $ 957.50 b. $826.31 c. $1,086.15 d. $1,032.20 e. $1,124.62
You have $1,000 to invest for two years and have two choices: Alternative 1: 2-year zero coupon bond selling at a price of 92. Altemative 2: A bank deposit which pays according to the following rates: 1 year spot rate 3 year spot rate 1 year forward rate two years from now 3.0% 4.5% 4.0% Analyse the altematives to detemine the amount received from each alternative at the end of two years. (Give answer to nearest dollar)
How much should you pay for a $10,000 bond (face value) with 8% coupon, annual payments, and 3 years to maturity if the interest rate is 14%?
Suppose that today’s date is April 15. A bond with a 7% coupon paid semiannually every January 15 and July 15 is quoted as selling at an ask price of 101.5000 percent of par. If you buy the bond from a dealer today, what price will you pay for it? Note: Round your answer to 2 decimal places.

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