In January 2021, you buy a 10-year coupon bond with coupon payments of $10,000 per year and a final value of $100,000. The yield to maturity of this bond is 10 percent. In January 2022, you collect your first coupon and sell the bond in the bond market. In January 2022 the yield to maturity of this bond decreased to 8 percent. Calculate the following: a. Holding period return rate b. Current yield rate c. Capital gain rate

In January 2021, you buy a 10-year coupon bond with coupon payments of $10,000 per year and a final value of $100,000. The yield to maturity of this bond is 10 percent. In January 2022, you collect your first coupon and sell the bond in the bond market. In January 2022 the yield to maturity of this bond decreased to 8 percent. Calculate the following: a. Holding period return rate b. Current yield rate c. Capital gain rate

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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On January 2021, you buy a 10-year coupon bond with coupon payments of $10,000 per year and a final value of $100,000. The yield to maturity of this bond is 10 percent. On January 2022, you collect your first coupon and sell the bond in the bond market. On January 2022 the yield to maturity of this bond decreases to 8 percent. Calculate the following: a. holding period return rate b. current yield rate c. capital gain rate Please include formulas and calculations
A) Find the price of a 5 year bond trading at a yield to maturity of 5.75% and has a coupon of 6% paid semi- annually. Assume you buy the bond on October 25, 2021 and it matures on October 25, 2026. B) Suppose the bond is callable in 3 years at $ 110. Using the price calculated above find the yield to call.
On January 1, 2020 you bought the Superset bond at $1118.07 and sold it on March 15 of the same year. On the day of the sale, you read the following information from the financial pages of a local newspaper: Coupon Maturity Price Yield SuperSet 8. Septembre 15/2025 8 What then is the effective annual return realized on this investment? a) -29.35% b) -6.98% c) -41.47% d) -10.56%
Calculate the YTM based on the information provided and explainthe difference between the Yield to Maturity rate and the originalcoupon rate. YTM Bond Details: A bond is currently selling for $850 with 15 years until it matures.The bond has a current coupon rate of 6% and makes paymentssemi-annually. You purchase the bond today 1/1/2023 as yoursettlement date and you are interested in knowing what the YTMwill be. **Note, when calculating the YTM the bond price (% of par)and face value (% of par) will not be percentages, please usenumbers for their respective section. The Yield Calculation is alreadybuilt into excel, all you have to do is type is =yield.
You wish to purchase a 10-year bond that was issued in 2013, par value $1,000 and has a 6% coupon rate, payable semi-annually. The bond matures in 2023 and you require a 10% nominal yield to maturity. What’s the term to maturity of the bond iin 2020? At what price should you be willing to pay for the bond in 2020? What’s the bond’s current yield?
Consider a government bond that pays coupon semi-annually on 15 February and 15 August each year, where the annual coupon rate is 7%. The face value of the bond is $100 and the bond is redeemable at par on 15 August 2030. If the current date is 27 March 2021 and the bond yield is quoted as 7.5% per annum compounded semi-annually, calculate the market price (which is also known as the clean price) with the help of the RBA formula.
A $11,000 bond with a coupon rate of 5.35% is redeemable on July 01, 2031. It is purchased on February 10, 2025 when the yield rate is 5.85% compounded semi- annually. Please include a well-labelled timeline diagram. a. What is the purchase price of the bond? Round to the nearest cent b. What is the amount of discount or premium on the bond?
You wish to purchase a 10-year bond that was issued in 2013, par value $1,000 and has a 6% coupon rate, payable semi-annually. The bond matures in 2023 and you require a 10% nominal yield to maturity. What’s the term to maturity of the bond iin 2020?
You find the following Treasury Bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semi annual coupons. In the table, find the Treasury bond that matures in May 2034. What is your yield to maturity if you buy this bond?
On May 1, 2021, you are considering to buy a newly-issued ABC Company bond, which is quoted as "ABC 5.6s34" in the WSJ and has a par value of $1,000. The company pays coupon interests every 6 months. If you require a 6.9% return on this bond, how much would you pay for this bond? (Hint: Identify annual coupon rate, years to maturity, and yield to maturity to compute the bond price.) Group of answer choices a. $883.78 b. $889.60 c. $885.22 d. $886.60 e. $887.12
Calculate the price of a 5-year semi-annual coupon bond with an annual coupon rate of 1.875% and face value 100. Assume that the bond’s maturity is 1stMarch 2029 and that it has just made its most recent coupon payment. What is its YTM? On the same date a bond with maturity 28th February 2029 with coupon rate 1.875% was quoted at 4.179%. Why do you think that the YTMs are different on the two 5-year bonds?
Example: You buy a 10-year maturity bond for the face value of $1,000 when the current interest rate is 9%. A year later, you sell the bond for $980. Assuming annual coupon payment, a. What is the new yield to maturity on the bond when you sell the bond? b. What's your holding period return during the year?

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