Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 14, Problem 11PS
Summary Introduction
To Discuss:
The bond equivalent and effective annual yield to maturity of a 20-year maturity bond with par value $ 1000 that makes semiannual coupon payments at a coupon rate of 8%, if the
- 950
- 1000
- 1050
Introduction:
A bond is a security that creates an obligation on the issuer to make specified payments to the holder for a given period of time.
The face value of the bond is the amount that the holder will receive on maturity along with the coupon rate which is also known as the interest rate of the bond.
Yield to maturity is termed as the discount rate that makes the present payments from the bond equal to its price. In simple terms, it is the average
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A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 8%. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is:a. $950b. $1,000c. $1,050
A 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 6%. Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is:
$800
$950
$1150
A 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 11%. Find the bond
equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal
places.)
a.
$
b. $
$
C.
Bond
Prices
X Answer is complete but not entirely correct.
Bond Equivalent
Annual Yield to
Maturity
960
1,000
1,060
7.42 X %
11.00
%
5.10 %
X
Effective Annual
Yield to Maturity
7.42 × %
11.00 × %
5.10 X %
Chapter 14 Solutions
Investments
Ch. 14 - Prob. 1PSCh. 14 - Prob. 2PSCh. 14 - Prob. 3PSCh. 14 - Prob. 4PSCh. 14 - Prob. 5PSCh. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Prob. 9PSCh. 14 - Prob. 10PS
Ch. 14 - Prob. 11PSCh. 14 - Prob. 12PSCh. 14 - Prob. 13PSCh. 14 - Prob. 14PSCh. 14 - Prob. 15PSCh. 14 - Prob. 16PSCh. 14 - Prob. 17PSCh. 14 - Prob. 18PSCh. 14 - Prob. 19PSCh. 14 - Prob. 20PSCh. 14 - Prob. 21PSCh. 14 - Prob. 22PSCh. 14 - Prob. 23PSCh. 14 - Prob. 24PSCh. 14 - Prob. 25PSCh. 14 - Prob. 26PSCh. 14 - Prob. 27PSCh. 14 - Prob. 28PSCh. 14 - Prob. 29PSCh. 14 - Prob. 30PSCh. 14 - Prob. 31PSCh. 14 - Prob. 1CPCh. 14 - Prob. 2CPCh. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - Prob. 5CP
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