A P1O0,000 semi-annual government bond is currently selling at 98 if the coupon rate is 8% and its maturity is 5 years, answer the following: a What is the current price of the bond? b. What is the Yield to maturity? Round-off final answer only to two decimal places. c.What is the coupon yield of the bond? Round-off final answer only to two decimal places. d.Assume a YTM of 10% and quarterly coupon payment. compute the price of the bond. Round-off final answer only to two decimal places.
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- A one-year zero coupon bond costs $99.43 today. Exactly one year from today, it will pay $100. What is the annual yield-to-maturity of the bond? (1.e., what is the discount rate one needs to use to get the price of the bond given the future cash flow of $100 in one year?) 1.0057 0.0057 2.0057 -0.0057Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) 1 2 3 4 5 Price $983.78 865.89 797.92 732.00 660.24 Required: a. Calculate the forward rate of interest for each year. b. How could you construct a 1-year forward loan beginning in year 3? c. How could you construct a 1-year forward loan beginning in year 4?A zero-coupon bond with a face value of $4000 and a 4.6% interest rate (compounded semiannually) will mature in 7 years. What is a fair price to pay for the zero-coupon bond today? A fair price to buy the bond at would be $ (Do not round until the final answer. Then round to the nearest cent as needed.)
- An investor wants to find the duration of a(n) 30-year, 9% semiannual pay, noncallable bond that's currently priced in the market at $649.02, to yield 14%. Using a 50 basis point change in yield, find the effective duration of this bond (Hint: use Equation 11.11). The new price of the bond if the market interest rate decreases by 50 basis points (or 0.5%) is $ (Round to the nearest cent.) CThe one-year spot rate z1 = 5% and the forward price for a one-year zero-coupon bond beginning in one year is 0.9346. Find the spot price (zero price) of a two-year zero-coupon bond.A four-year bond with a yield of 10% (continuously compounded) pays an 20% coupon at the end of each year. (? −0.1 ≅ 0.9,? −0.2 ≅ 0.8,? −0.3 ≅ 0.7,? −0.4 ≅ 0.6) a) What is the bond’s price? b) What is the bond’s duration? c) Use the duration to calculate the effect on the bond’s price of a 0.15% increase in its yield
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