You purchased two bonds a 10 year Treasury that has a 2% coupon and a 20 year Treasury that has a 5% coupon threeyears ago. Both securities pay coupons semiannually. You purchased the 10 year and 20 year bonds with YTMs of 4.25%and 4.65%, respectively. Since purchasing the bonds the yields have decreased, by 50 basis point for you 10 year bondand 35 basis point for your 20 year bond. Calculate the holding period return for both bonds.Please show all of your work for credit.

Price of a bond is the present value of coupon payments plus the present value of the par value of…

You purchased two bonds a 10 year Treasury that has a 2% coupon and a 20 year Treasury that has a 5% coupon th years ago. Both securities pay coupons semiannually. You purchased the 10 year and 20 year bonds with YTMs of and 4.65%, respectively. Since purchasing the bonds the yields have decreased, by 50 basis point for you 10 year b and 35 basis point for your 20 year bond. Calculate the holding period return for both bonds. Please show all of your work for credit

You purchased two bonds a 10 year Treasury that has a 2% coupon and a 20 year Treasury that has a 5% coupon th years ago. Both securities pay coupons semiannually. You purchased the 10 year and 20 year bonds with YTMs of and 4.65%, respectively. Since purchasing the bonds the yields have decreased, by 50 basis point for you 10 year b and 35 basis point for your 20 year bond. Calculate the holding period return for both bonds. Please show all of your work for credit

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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You buy an 8-year, 3.30% annual - payment coupon bond priced to yield 5.30 %. You sell the bond at year - end, immediately after receiving the first coupon payment. Assuming the YTM stayed constant over the holding period, what are your capital gains from the sale of the bond? A. -0.09 B. -0.02 C. 0.02 D. 0.09
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.
You bought one of Great White Shark Repellant Company's 8 percent coupon bonds one year ago for $1,044. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 6 percent. The bonds have a par value of $1,000. If the inflation rate was 3.4 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total real return %
You purchased a zero-coupon bond one year ago for $277.33. The market interest rate is now 8 percent. Assume semiannual compounding. If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year? Assume a par value of $1,000. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Total return for the past year %
Baghiben
A 9 year bond with maturity value of $4300.02 and a yield rate of 4.9% was sold 18 months before maturity. If the seller earned 6% on the bond over the time that it was held, then for how much did they sell it? Give your answer rounded to the nearest cent
You are considering two bonds, AMD and BBS. Both bonds are selling at par and pay the same amount of interest of $120 annually. Bond AMD will mature in 5 years while bond BBS will mature in 6 years. If the YTM on these two bonds increases by 1%, what do you expect to happen to their bond prices? • A. Both bond prices will increase, but BBS will increase more than AMD. • B. Both bond prices will decrease, but BBS will decrease more than AMD. • C. Both bond prices will increaks, but AMD will increase more than BBS. D. Both bond prices will decrease, but AMD will decrease more than BBS. You observe the current yield curve as follows: r0.5=4%, r1=4.2%, r1.5=4.3%, and Г2=4.1%. What is the price of a T-note which has a coupon rate of 4%, 2 years to maturity, and $1,000 par? • A. $1,064.69 • B. $998.03 • C. $992.52 • D. $988.87 The interest rates on 3- and 2-year Treasuries are 2.35% and 2.20%, respectively. If you estimate that the 1-year expected spot rate in year 3 is 2.53%, what is…
Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.2% when the market interest rate is 5.2%. You sell the bond one year later after the market interest rate falls to 3.2%. The rate of return earned on the bond during the year was%. (Round your response to two decimal places.)
Oscorp's Norman Special Long Bond have a coupon rate of 0.50% and pay the coupon on a semi - annual basis. The face value of the bond is $1000. You purchased these bonds one year ago at a YTM of 7%. At that time the bonds had a maturity of 25 years. Today the bonds are trading at a YTM of 7.50%. What is the total bond return?
You bought a 25-year, 6.8% semi-annual coupon bond today and the current market rate of return is 5.3%. The bond is callable in 7 years with a $1,087 call premium. What price did you pay for your bond? (Show your answer to nearest cent with no comma. For example $1,378.565 is entered as 1378.57)

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