Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A 4-year coupon bond has payments as follows:
Bond Cash Flow
Year 1 £5
Year 2 £5
Year 3 £5
Year 4 £105
The 5% coupon bond is currently trading at par (£100). Compute the duration of the bond. How much do you expect this
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- Suppose that a bond pays semiannual coupons in the sequence 25, 30, 25, 35, 25, 40, ..., 25, 85. If the redemption value is 2500 dollars and the yield rate is 8.6 percent convertible semiannually, what is the price of the bond? Answer= dollars.arrow_forwardA bond with a coupon rate of 7.30% has a price that today equals $868.92. The $1,000 face value bond pays coupon every 6 months, 30 coupons remain, and a coupon was paid yesterday. Suppose you buy this bond at today’s price and hold it so that you receive 20 coupons. You sell the bond upon receiving that last coupon. Find the selling price if the bond’s YTM remains constantarrow_forwardA bond has a coupon rate of 5.2%, and 6.5 years until maturity. If the YTM is 6.2%, what is the price of this bond? TIP: Write the price as a percentage of the bonds par value. All bonds in this class make two coupon payments per year, and have a face value of $1,000. You don't need to write in the "%" sign.arrow_forward
- A bond has a Macaulay duration of 12.00 and is priced to yield 10.0%. If interest rates go up so that the yield goes to 10.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down to 9.5%, what will be the bond's percentage change in price? Comment on your findings.arrow_forwardYou are given the following information with respect to a non-callable bond: par amount: 1,000 • term to maturity: 4 years annual coupon rate: 8% payable annually. Time 0 1 2 3 1-Year Annual Forward Interest Rates Scenario X Scenario Y 7% 7% 8% 10% 7% 6% 7% 5% Each interest rate scenario has an equal probability of occurring. Calculate the value of the bond (i.e. the expected present value of the bond payments). A 1,000.00 B 1,018.40 C 1,022.80 D 1,030.39 E 1,031.07arrow_forwardA general power bond varies a coupon rate of 9.2%, has 9 years until maturity, and sells at a yield to maturity of 8.2%. a. Wage interest payments do bond holders receive each year? b. At what price does the bond sell? c. What will happen to the bond price if the yield to maturity falls to 7.2%?d. If the yield to maturity falls to 7.2%, will the current yield be less, or more, than the yield to maturity, and by what percent?arrow_forward
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