A General Power bond carries a coupon rate of 9.2%, has 9 years until maturity, and sells at a yield to maturity of 8.2%. (Assume annual interest payments.) a. What interest payments do bondholders receive each year? b. At what price does the bond sell? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. What will happen to the bond price if the yield to maturity falls to 7.2%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Interest payments b. Price c. Price will by

A General Power bond carries a coupon rate of 9.2%, has 9 years until maturity, and sells at a yield to maturity of 8.2%. (Assume annual interest payments.) a. What interest payments do bondholders receive each year? b. At what price does the bond sell? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. What will happen to the bond price if the yield to maturity falls to 7.2%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Interest payments b. Price c. Price will by

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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A Treasury bond that settles on October 18, 2022, matures on March 30, 2041. The coupon rate is 6.10 percent, and the bond has a yield to maturity of 5.57 percent. What are the Macaulay duration and modified duration? Note: Use the duration functions in Excel to solve the problem. Do not round intermediate calculations. Round your answers to 4 decimal places. Answer is complete but not entirely correct. Macaulay duration 11.4179 Modified duration 10.8154 X
Consider a bond with a coupon of 4.6 percent, five years to maturity, and a current price of $1,047.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
Consider a bond that has a life of 2 years and pays a coupon of 10% per annum (with semiannual payments); the yield is 5% per annum with semiannual compounding.(a) What is the bond’s price?(b) What is the bond’s duration?(c) Suppose that the bond price is the one you computed in part (a) and that the 6M, 12M, and 18M zero rates are respectively 4.2%, 4.8% and 5.6% per annum. What is the 2Y zero rate assuming all rates are quoted with semiannual compounding?
A 30-year maturity bond making annual coupon payments with a coupon rate of 14.5% has duration of 10.64 years. The bond currently sells at a yield to maturity of 9%. Required: a. Find the price of the bond if its yield to maturity falls to 8%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of the bond b. What price would be predicted by the duration rule, if its yield to maturity falls to 8% ? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Predicted price
You find a zero coupon bond with a par value of $10,000 and 19 years to maturity. The yield to maturity on this bond is 4.7 percent. Assume semiannual compounding periods. What is the price of the bond? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
What is the yield to maturity on a bond that has a price of $1,700 and a coupon rate of 12% annually for 6 years at the end of which it repays the principal of $1000? Is the bond selling at premium, at par, or at discount? How can you tell? (Using financial calculator)
A bond is issued with a coupon of 5% paid annually, a maturity of 31 years, and a yield to maturity of 8%. What rate of return will be earned by an investor who purchases the bond for $659.51 and holds it for 1 year if the bond's yield to maturity at the end of the year is 9% ? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Rate of return %
What is the market price of a bond if the face value is $1,000 and the yield to maturity is 5.7%? The bond has a 5.15% coupon rate and matures in 14 years. The bond pays interest semiannually. Please express answer as $X.XX or XX.XX and use rounding guideline included in "Course Information" module. Do not round until the final result.
A bond has the following trading data: Coupon rate = 7 1/4%; Current price = 107.78125% of par; Maturity = 2 years. Bonds such this pay interest semiannually. DURATION. Calculate the duration of this bond. Be sure to store your intermediate data as you calculate your final answer. Question options: 1) 1.934 years 2) 1.907 years 3) 1.852 years 4) None of the above
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What is the market price of a bond if the face value is $1,000 and the yield to maturity is 6.7% ? The bond has a 6.15% coupon rate and matures in 12 years. The bond pays interest semiannually. Please express answer as $X.XX or XX.XX and use rounding guideline included in "Course Information" module. Do not round until the final result.

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