You observe the yields of the following Treasury securities (all yields are shown on a bond-equivalent basis): Year (Period) Yield to Maturity (%) Spot Rate (%) 2.15 2.15 3.50 3.50 6.50 ? 0.5 (1) 1.0 (2) 1.5 (3) The security maturing in 1.5 years is selling at par and pays coupons every six-month. The 0.5 and 1.0-year securities are zero-coupon instruments. All Face values are equal to €1,000. What is the missing spot rate on a bond equivalent basis (to the closest second decimal place)?. Select one: a. The missing annual spot rate is in between 6.90% and 6.92%. b. The missing annual spot rate is in between 3.33% and 3.35%. Oc. The missing annual spot rate is in between 6.61% and 6.63%. O d. None of the other answers given. Oe. The missing annual spot rate is in between 6.32% and 6.34%.

You observe the yields of the following Treasury securities (all yields are shown on a bond-equivalent basis): Year (Period) Yield to Maturity (%) Spot Rate (%) 2.15 2.15 3.50 3.50 6.50 ? 0.5 (1) 1.0 (2) 1.5 (3) The security maturing in 1.5 years is selling at par and pays coupons every six-month. The 0.5 and 1.0-year securities are zero-coupon instruments. All Face values are equal to €1,000. What is the missing spot rate on a bond equivalent basis (to the closest second decimal place)?. Select one: a. The missing annual spot rate is in between 6.90% and 6.92%. b. The missing annual spot rate is in between 3.33% and 3.35%. Oc. The missing annual spot rate is in between 6.61% and 6.63%. O d. None of the other answers given. Oe. The missing annual spot rate is in between 6.32% and 6.34%.

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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A bond has 10 years until maturity, a coupon rate of 8.1%, and sells for $1,190. Interest is paid annually. (Assume a face value of $1,000.) a. If the bond has a yield to maturity of 9.9% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. Price b. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Rate of return % c. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Real rate of return %
A BBB-rated corporate bond has a yield to maturity of 10.4 % . AU.S. Treasury security has a yield to maturity of 8.6 % . These yields are quoted as APRs with semi-annual compounding. Both bonds pay semi- annual coupons at a rate of 8.7 % and have five years to maturity. . What is the price (expressed as a percentage of the face value) of the Treasury bond? b. What is the price ( expressed as a percentage of the face value) of the BBB-rated corporate bond? c. What is the credit spread on the BBB bonds? a
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of the face value): Maturity (years) Price (per $100 face value) 1 $96.32 a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat? a. Compute the yield to maturity for each bond. The yield on the 1-year bond is %. (Round to two decimal places.) 2 $91.93 3 $87.36 4 5 $82.57 $77.42
Suppose a 10-year, $1000 bond with a coupon rate of 8.4% and semiannual coupons is trading for $1035.64. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.4% APR, what will be the bond's price?
Using the expectations hypothesis theory for the term structure of interest rates, determine the expected return for securities with maturities of two, three, and four years based on the following data. Note: Input your answers as a percent rounded to 2 decimal places. 1-year T-bill at beginning of year 1 1-year T-bill at beginning of year 21 1-year T-bill at beginning of year 3 1-year T-bill at beginning of year 4 2-year security 3-year security 4-year security Expected Return % % % Interest Rate 7% 9% 10% 12%
The following is a list of prices for zero-coupon bonds of various maturities. Maturity (years) 1 2 Price of Bond $ 930.00 902.97 3 4 829.62 772.99 Required: a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Maturity (Years) Price of Bond YTM 1 $ 930.00 % 2 $ 902.97 % 3 $ 829.62 % 4 $ 772.99 %
A bond has 10 years until maturity, a coupon rate of 8.3%, and sells for $1,170. Interest is paid annually. ( Assume a face value of $1,000.) If the bond has a yield to maturity of 9.7% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
Suppose a 10-year, $1,000 bond with a coupon rate of 8.7% and semiannual coupons is trading for $ 1,034.28 a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b If the bond's yield to maturity changes to 9.9% APRwhat will be the bond's price?
Suppose a five-year face value of $1000 bond with a 9% coupon rate, and coupons are paid semi-annually. The yield to maturity of this bond is 7% (APR with semi-annual compounding). a) Is this bond trading at a discount, at par, or a premium? Explain. b) If the bond's yield to maturity rises to 8% (APR with semi-annual compounding), what price will the bond trade for?
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.
Consider a bond paying a coupon rate of 9.5% per year quarterly when the market interest rate is 5.25% per half-year. The bond has four years until maturity. a. Find the bond’s price today and nine months from now. b. What is the total rate of return on the bond?
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.1% (annual payments). The yield to maturity on this bond when it was issued was 5.8%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment? After the first coupon payment, the price of the bond will be $ (Round to the nearest cent.)

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