A $1,000 Face Value Treasury bond with 18 months left to maturity has annual coupons of $32 paid semi-annually. The Term Structure of Interest shows that th 6 month YTM is 3.2%, the 12 month YTM is 3.32% and the 18 month YTM is 3.53%. What is the price of the bond? [Hint: The price of the bond should be the same as the total price of the STRIPS that can be created from it.]

A $1,000 Face Value Treasury bond with 18 months left to maturity has annual coupons of $32 paid semi-annually. The Term Structure of Interest shows that th 6 month YTM is 3.2%, the 12 month YTM is 3.32% and the 18 month YTM is 3.53%. What is the price of the bond? [Hint: The price of the bond should be the same as the total price of the STRIPS that can be created from it.]

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 two-year coupon bond issued by an airline with Face Value of $1,000, Coupon Rate of 3%, Annual Default Probability of 5%, & Risk-Free Interest Rate of 3% per year. Use a binomial tree to value the bond assuming no recovery. Show your work & write your answer in dollars and cents below. The value (price, expected present value, etc.) of the bond is _______.
You have a bond with the following features: - Semi-annual coupon payments. - Coupon rate 7.60%. - Face value $1,000. - 3.5 years to maturity. - Current market price $1,130. Requirements (A, B, and C are independent): 1. Calculate the duration and modified duration for this bond. Duration ___ Mduration ___ 2. Now, let’s assume the modified duration of this bond is 3 years. If the yield increases by 30 bps (basis points), what will the new price of the bond using modified duration? 3. If the yield drops by 75 bps, what is the actual new price of the bond?
You have decided to invest in Bond x, an n-year bond with semi-annual coupons and the following characteristics: Par value is 1000 The ratio of the semi - annual coupon rate to the desired semi- annual yield rate, is 1.03125. The present value of the redemption value is 381.5. Given v=0.5889, what is the price of bond x ? A) 1,055 B) 1,072 C ) 1,073 D) 1,069 E) 1,044
Compute the price of a risk-free bond with a face value of $1,000 that has seven years left to maturity, a coupon rate of 5%, and annual interest payments. Assume it just made a coupon payment (i.e., it has seven annual payments left). The current term structure of risk-free rates is provided below. Face value Coupon rate $ 1,000.00 5.00% Term structure Maturity 1 2 3 4 5 6 7 Risk-free yields 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Coupon payment Face value Cash flows PV (CF) Price
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.
What is the current value of a 30-year bond making semi-annual coupon payments that has a face value of $1,000 and a coupon rate of 8%, if the YTM is 4%, how much does the bond currently sell for? Does the bond sell at a discount, premium, or at face value? Reference the below formulas when solving the problem above: PV = FV / (1+r)^t FV = PV(1+r)^t FVA = PMT(((1+r)^t) -1) / r FVA = PMT((1+(r/12)^t(12))-1)/(r/12) PVA = PMT(((1-(1+r)^-t) / r)) PVA = PMT((1-(1+(r/12))^-t(12)))/(r/12) Bo = PMT ((1-(1+r/2)^-t(2))) / r/2 + FV / (1+r/2)^t(2)
Please answer fast i give you upvote.
A bond that matures in13years has a$1,000par value. The annual coupon interest rate is8percent and the market's required yield to maturity on a comparable-risk bond is12percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?
Let's denote the price of a nonmaturing bond (called a consol) as P. The equation that indicates this price is Pn =-, where I is the annual net income the bond generates and r is the nominal market interest rate. a. Suppose that a bond promises the holder $200 per year forever. The nominal market interest rate is 6 percent. Calculate the bond's current price: S. (Round your answer to the nearest whole dollar.)
Subject:- finance
Suppose that your firm issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. For questions e-g, assume that this bond DOES NOT pay any coupon a) What was its price when it was issued? b) For this zero-coupon bond, suppose it is actually sold for $500, what should the YTM be?

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