Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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A $1,000 bond has a coupon of 5 percent and matures after twelve years. Assume that the bond pays interest annually.
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- What is the duration of the following bond:$1,000par value,6%annual coupon, 4 years to maturity, and yield to maturity of6.5%? You will need your answer for the next question. In the prior question, what is the present value of the bond?arrow_forwardA bond has a coupon rate of 6.4 and pas coupons semi-annually. The bond matures in 10 years and you will receive $1,000 at that time. If the required return is 6.69%, how much should you be willing to pay for the bond today? Round to 2 decimal places. Include a dollar sign ($) or percent (%) as appropriate. Answer:arrow_forwardA $1,000 bond has a coupon of 8 percent and matures after ten years. Assume that the bond pays interest annually. What would be the bond's price if comparable debt yields 9 percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ What would be the price if comparable debt yields 9 percent and the bond matures after five years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ Why are the prices different in a and b?The price of the bond in a is than the price of the bond in b as the principal payment of the bond in a is than the principal payment of the bond in b (in time). What are the current yields and the yields to maturity in a and b? Round your answers to two decimal places. The bond matures after ten years: CY: %YTM: % The bond matures after five years: CY: %YTM: %arrow_forward
- What is the duration of a bond with a coupon of 5%, paid semi-annually and a face value of S100. The current market interest rate (which will equal the bond's yield to maturity) is 4%. The bond has a five-year maturity. What is the bond's duration in years? Round your answer to one decimal place.arrow_forward5) You purchase a 30 year bond with nominal semiannual coupon rate 7% and nominal semiannual yield rate of 6% and face value of $1,000. If you sell the bond immediately after receiving your 20th semiannual coupon payment for a price of $925, then find your actual semiannual nominal yield rate for the 10 year period, and find the buyer's semiannual nominal yield rate for the 20 year period.arrow_forwardConsider a Treasury bond with 8% coupon rate and 4 years to maturity (annual coupons). You enter into a forward contract to purchase this bond two years from today right after the second coupon is paid. What is the forward price? The prices of zero coupon bonds maturing in one, two, three, and four years (per 1$ face value) are 0.9524, 0.8900, 0.8278, and 0.7629 respectively.arrow_forward
- A 9-year bond has a yield of 13.5% and a duration of 8.63 years. If the MARKET yield changes by 60 basis points, what is the percentage change in the bond’s price? Is this an increase or decrease? A 9-year bond has a yield of 13.5% and a duration of 8.63 years. If the BOND'S yield changes by 60 basis points, what is the percentage change in the bond’s price? Is this an increase or decrease? ( Explain well both question with proper step by step Answer) .arrow_forwardWhat is the price of a bond with the following features? 5 years to maturity, face value of $1000, coupon rate of 4% (annual coupons) and yield to maturity (discount rate) of 9.8%.. Enter your answer in terms of dollars and cents, rounded to 2 decimals, and without the dollar sign. That means, for example, that if your answer is $127.5678, you must enter 127.57arrow_forwardA $1,000 bond has a 6.5 percent coupon and matures after ten years. If current interest rates are 8 percent, what should be the price of the bond? Assume that the bond pays interest annually. Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar. $ If after six years interest rates are still 8 percent, what should be the price of the bond? Use Appendix B and Appendix D to answer the question. Assume that the bond pays interest annually. Round your answer to the nearest dollar. $ Change the interest rate in a and b to 6 percent and rework your answers. Assume that the bond pays interest annually. Round your answers to the nearest dollar. Price of the bond (ten years to maturity): $ Price of the bond (four years to maturity): $arrow_forward
- A bond has 10 years remaining to maturity, pays annual coupons (yesterday) of $6, and has a face value of $100. The current price of the bond is $125.591 and the price next year is expected to be $123.358. (Interest rates are not expected to change over the coming year.) What is the yield to maturity on the bond?arrow_forwardAssume a bond that promises eight annual coupon payments of $70 and will repay its face value of $1000 at the end of the eight years. Assuming that you are offered the bond for a price of $1035.94, use detailed workings to compute the implied YTMarrow_forwardA bond that matures in 8 years has a par value of $1,000 and an annual coupon payment of $70; its market interest rate is 9%. What is its price? A bond that matures in 12 years has a par value of $1,000 and an annual coupon rate of 10%; the market interest rate is 8%. What is its price? Which of those two bonds is a discount bond, and which is a premium bond? Explain.arrow_forward
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