A) An annuity with a price of $200,000, a term of eight years, and an annual payment of $37,500. Find the yield to the nearest tenth of a percent. B) A coupon bond with a price of $50,000, a term of ten years, a face value of $65,000 and a coupon rate of 4 percent. Find the yield to the nearest hundredth of a percent. C) A bond which has a price of $50,000. It returned a payment of $35,000 after two years, a payment of $40,000 after five years, and a (final) payment of $25,000 after ten years. Find the yield to the nearest tenth of a percent.

A) An annuity with a price of $200,000, a term of eight years, and an annual payment of $37,500. Find the yield to the nearest tenth of a percent. B) A coupon bond with a price of $50,000, a term of ten years, a face value of $65,000 and a coupon rate of 4 percent. Find the yield to the nearest hundredth of a percent. C) A bond which has a price of $50,000. It returned a payment of $35,000 after two years, a payment of $40,000 after five years, and a (final) payment of $25,000 after ten years. Find the yield to the nearest tenth of a percent.

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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Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline
b) suppose that the market interest rate is 5%. Calculate the present value of the following. Show how your answer is obtained. i）A coupon bond with an annual coupon payment of $135 and a face value of $1500 that matures in five years. ii) A discount bond with a face value of $5000 that matures in one years. iii) A fixed payment loan with annual payments of $163 that matures in three years.
Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the rate of return of the bond? What is the yield to maturity of the bond?
Consider a 20-year bond with a face value of $1,000 that has a coupon rate of 5.7%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. (Round to the nearest cent.)
Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.9%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ (Round to the nearest cent.)
Consider two bonds. The first is a 6% coupon bond with six years to maturity, and a yield to maturity of 4.5% annual rate, compounded semi-annually. The second bond is a 2% coupon bond with six years to maturity and a yield to maturity of 5.0%, annual rate, compounded semi-annually. a. Draw a cash flow diagram for each bond. b. Calculate the current price per $100 of face value for each bond.
Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.01% when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $100 face value? b. What is the internal rate of return of your investment? Note: Assume annual compounding. The cash flow at time 1-3 is $ (Round to the nearest cent. Enter a cash outflow as a negative number.) (Round to the nearest cent. Enter a cash outflow as a negative number.) The cash outflow at time 0 is $ The total cash flow at time 4 (after the fourth coupon) is $ negative number.) b. What is the internal rate of return of your investment? (Round to the nearest cent. Enter a cash outflow as a
Calculate the present value of a $1,000 discount bond with five years to maturity if the yield to matu-rity is 6%.
Suppose you purchase a 10-year bond with 6.1 % annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 4.7 % when you purchased and sold the bond, a. What cash flows will you pay and receive from your investment in the bond per $ 100 face value? b. What is the annual rate of return of your investment?
Consider two 30-year bonds with the same purchase price. Each has an annual coupon rate of 5% paid annually and a par value of 1000. The first bond has an annual yield rate of 5%, and a redemption value of 1200. The second bond has an annual yield rate of j, and a redemption value of 800. Calculate j. Use the bond's salesman method.
Suppose you purchase a 10-year bond with 6% annual coupons. You hold the bond for fouryears, and sell it immediately after receiving the fourth coupon. If the bond’s yield to maturitywas 5% when you purchased and sold the bond,a. What cash flows will you pay and receive from your investment in the bond per $100 face value?b. What is the internal rate of return of your investment?
Suppose you purchase a 10-year bond with 6.4% annual coupons. You hold the bond for four years, and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.5% when you purchased and sold the bond, a. what cash flows will you pay and receive from your investment in the bond per $100 face value? b. what is the annual rate of return of your investment? a. What cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline: (Round to the best choice below.) A. Year 0 1 2 3 4 Cash Flows $110.90 $6.40 $6.40 $6.40 $104.50 B. Year 0 1 2 3 4 Cash Flows - $106.78 $6.40 $6.40 $6.40 $110.90 C. Year 0 2 3 4 Cash Flows $104.50 $6.40 $6.40 $6.40 $110.90 OD. Year 1 2 3 Cash Flows $106.78 $6.40 $6.40 $6.40 $110.90 b. What is the annual rate of return of your investment? The annual rate of return of your investment is %. (Round to one decimal place.)

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