Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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5. Compute the yield to maturity of a discount bond selling for $15,000.00 with a face value of $18,000,00 in one year.
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- You purchase a 3 - year corporate bond, which has a coupon rate of 8%, paid annually. Its par value is $ 1,000. If the YTM is 6%, what is the duration of the bond? A. 2.83 years B. 2.92 years C. 2.67 years D. 2.79 yearsarrow_forward1. Create a similar graph to the one shown on page 239, Figure 7.3. Graph two bonds each, with a face value of $1000. Both bonds have a coupon rate of 12.4% paid SEMI - ANNUALLY. Bond L has a maturity of 20 years and Bond S has a maturity of one year. Compute the value of the bonds for annual interest rates of 2 - 20% at increments of 2%. In the box below, enter the value of the SEMI - ANNUAL coupon. Post the table of values you compute and the graph as your Post 3 in the discussion board.arrow_forwardIf you were to purchase a bond for $1,100 that paid $50 per year in dividends, what will be the current yield of your bond?arrow_forward
- Find the total return earned by the bond with the characteristics shown in the table. Face Value $14,000 Annual Interest Rate 6.09% Term to Maturity 4 months What is the total return earned by this bond? $ (Round to the nearest cent as needed.)arrow_forwardThe Saleemi Corporation's $1,000 bonds pay 5 percent interest annually and have 13 years until maturity. You can purchase the bond for $865. a. What is the yield to maturity on this bond? b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 8 percent?arrow_forwardCalculate the yield on the following bonds: A. Cost $1,000, semiannual coupon payment 3%. Since 3% is semiannual, then double it to get 6% annual yield. Always calculate yield in terms of annual percentage. B. Cost $950, semiannual coupon payment 3%. Since 3% is semiannual, then double it to get 6% annual yield. Always calculate yield in terms of annual percentage.arrow_forward
- Compute the present value of: (a) A £1000 simple loan made for 6 years at 5% interest rate (b) A coupon bond with face value £1000, 5% coupon rate, maturity of 4 years, and interest rate of 3%arrow_forwardon Assume that you purchase a 30-year stripped bond with a $100,000 face value. The current bond price is $9,937.73 and the yield is 8%. Calculate the interest revenue during the first year of holding the bond. Calculate amounts to nearest dollar, no $. Answer:arrow_forwardIf the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond is $1,000, and you purchase the bond for $1,250, what is the current yield on the bond? O A. 5 percent. O B. 6 percent. OC. 12.5 percent. O D.8 percent.arrow_forward
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