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- A 6.75 percent coupon bond with 20 years left to maturity is priced to offer a 6.0 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.6 percent. (Assume interest payments are semiannual.) What would be the total return of the bond in dollars? What would be the total return of the bond in percent?A coupon bond of 8.4 percent with 18 years left to maturity is priced to offer a 6.70 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.4 percent. (Assume interest payments are semiannual.) What would be the total return of the bond in dollars? What would be the total return of the bond in percentage?Calculate the price of a $1,000, 5% bond with three years to maturity with 7.5% market interest rates. Assume annual coupon payments.What is the duration of this bond?Using the duration price approximation formula, calculate the expected price change in % if interest rates fall to 7.0%. If your answer is negative, don't forget the sign!
- A 6.10 percent coupon bond with 10 years left to maturity is priced to offer a 7.2 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. Assuming semiannual interest payments, what is the change in price the bond will experience in dollars?Assume that the yield curve is YT = 0.04 + 0.001 T. (a) What is the price of a par - $1,000 zero - coupon bond with a maturity of 10 years? (b) Suppose you buy this bond. If 1 year later the yield curve is YT = 0.042 + 0.001 T, then what will be the net return on the bond?A 6.25 percent coupon bond with 22 years left to maturity is priced to offer a 5.5 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What would be the total return of the bond in dollars? What would be the total return of the bond in percent?
- Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $89.75, while a 2-year zero sells at $79.88. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 10% per year. Required: What is the yield to maturity of the 2-year zero? What is the yield to maturity of the 2-year coupon bond? What is the forward rate for the second year? If the expectations hypothesis is accepted, what are (1) the expected price of the coupon bond at the end of the first year and (2) the expected holding-period return on the coupon bond over the first year? Will the expected rate of return be higher or lower if you accept the liquidity preference hypothesis?Consider a bond that has a current value of $1,081.11, a face value of $1,000.00, a coupon rate of 10% and five years remaining to maturity.a. What is the bond’s yield-to-maturity today?b. If the bond’s yield does not change, what is its value one year from today? Please solve both partsA coupon bond of 7.9 percent with 15 years left to maturity is priced to offer a 6.45 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.2 percent. (Assume interest payments are semiannual.) What would be the total return of the bond in dollars? What would be the total return of the bond in percentage? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Total return in dollars Total return in percentage Check my work %
- Suppose that a 1-year zero-coupon bond with face value $100 currently sells at $94.34, while a 2-year zero sells at $84.99. You are considering the purchase of a 2-year-maturity bond making annual coupon payments. The face value of the bond is $100, and the coupon rate is 12% per year.a. What is the yield to maturity of the 2-year zero?b. What is the yield to maturity of the 2-year coupon bond?c. What is the forward rate for the second year?d. According to the expectations hypothesis, what are (i) the expected price of the coupon bond at the end of the first year and (ii) the expected holding-period return on the coupon bond over the first year?e. Will the expected rate of return be higher or lower if you accept the liquidity preference hypothesis?You own a bond with an annual coupon rate of 5% maturing in two years and priced at 85%. Suppose that there is a 23% chance that at maturity the bond will default and you will receive only 45% of the promised payment. Assume a face value of $1,000. A. What is the bond’s promised yield to maturity?B.What is its expected yield (i.e., the possible yields weighted by their probabilities)?A 7.5 percent coupon bond with 13 years left to maturity is priced to offer a 6.25 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. What would be the total return of the bond in dollars? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Total return What would be the total return of the bond in percentage? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Total return %