Suppose you purchase a 5-year AAA-rated Swiss bond for par that is paying an annual coupon of 5 percent and has a face value of2,100 Swiss francs (SF). The spot rate is US $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yieldincreases to 7 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1.a. What is the loss or gain to a Swiss investor who holds this bond for a year?b. What is the loss or gain to a U.S. Investor who holds this bond for a year?1(For all requirements, input the amount as a positive value. Do not round intermediate calculations, Round your answers to 2decimal places. (e.g., 32.16))a.b.to Swiss investorto U.S. investor%%

Bonds can trade at a premium, at par, or at a discount, depending on the market conditions for…

a. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. Investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a b. to Swiss investor to U.S. investor % %

a. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. Investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a b. to Swiss investor to U.S. investor % %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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Suppose you purchase a 5-year AAA-rated Swiss bond for par that is paying an annual coupon of 5 percent and has a face value of 2,100 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 7 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1. a. What is the loss or gain to a Swiss investor who holds this bond for a year? b. What is the loss or gain to a U.S. investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations, Round your answers to 2 decimal places. (e.g., 32.16)) b. to Swiss investor to U.S. investor % %
Suppose you purchase a 8-year AAA-rated Swiss bond for par that is paying an annual coupon of 8 percent and has a face value of 1500 Swiss francs (SF). The spot rate is US $0.66667 for SF1. At the end of the year, the bond is downgraded to AA and the yield increases to 10 percent. In addition, the SF depreciates to U.S. $0.74074 for SF1. 8. What is the loss or gain to a Swiss Investor who holds this bond for a year? b. What is the loss or gain to a U.S. investor who holds this bond for a year? (For all requirements, input the amount as a positive value. Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g.. 32.16)) a b Loss Gain Answer is complete but not entirely correct. to Swiss investor to US investor (974) % 0:29
Suppose you (U.S. investor) purchase a 5-year, AA-rated Euro bond for par that is paying an annual coupon at the rate equal to 8 percent. The bond has a face value of 1,000 Euros. The spot exchange rate at the time of purchase is USD1.15/EUR. At the end of the year 1, the bond is upgraded to AAA-rated and the yield changes to 7.5% per annum continuous compounding. In addition due to changes in macroeconomic environment, the exchange rate also changed to USD1.25/EUR. Assume that a U.S. investor holds this bond for one year and sells it in the market at the end of year 1. EUR is the abbreviation for Euro and USD is the abbreviation for U.S. dollar. What is the overall gain / loss in U.S. dollars for the U.S. investor at the end of year 1 (t = 1 year)? (Roundoff your answer to four decimal places, in order to get as accurate answer as possible on Canvas. If your answer is -$1.2345, loss of $1.2345, then type your answer as -1.2345.)
Suppose you purchase a 9 - year AAA-rated Swiss bond for par that is paying an annual coupon of 6 percent. The bond has a face value of 1000 Swiss francs (SF). The spot rate at the time of purchase is SF1.40/$1. At the end of the year, the bond is downgraded to AA and the yield increases to 9 percent. In addition, the SF depreciates to SF1.65/$1. What is the loss or gain to the Australian investor from the foreign exchange risk? A. 15.96% B .12.77% C. 13.55% D. 24.15%
Jennifer Davis is planning to buy 10-year zero-coupon bonds issued by the u.s. treasury. if these bonds have a face value of $1000 and are currently selling at $410.63, what is the effective annual yield? assume that interest compounds semiannually on similar coupon-paying bonds. round final answer to 2 decimal places.
Suppose that you have purchased a EUR bond issued by Deutsche Bank. At the time of the purchase, the price of the bond was EUR 98.5M. The bond matures in 3 years, pays a fixed 5% coupon bond, and has a face value of EUR 100M. That is the expected YTM in USD if the spot rate is USD 1/EUR, F1 is USD 1.12/EUR, F2 is USD 1.15/EUR, F3 is USD 1.18/EUR? Please enter your answer as % -- e.g. if your answer is 2.34% type in 2.34.
A 12-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 6.00% (3.000% of face value every six months). The reported yleld to maturity is 5.6% (a six-month discount rate of 5.6/2 = 2.8%). a. What is the present value of the bond? b. If the yleld to maturity changes to 1%, what will be the present value? c. If the yield to maturity changes to 8%, what will be the present value? d. If the yield to maturity changes to 15%, what will be the present value? (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.) a. Present value b. Present value c. Present value d. Present value
Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % % Real return Nominal return b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 1%
Jennifer Davis is planning to buy 10-year zero-coupon bonds issued by the u.s. treasury. if these bonds have a face value of $1000 and are currently selling at $410.63, what is the effective annual yield? assume that interest compounds semiannually on similar coupon-paying bonds. round answer to 5 decimal places.
a) Bond has a face value of ₡3000 and pays coupon of 12% per annum for 4 years, if the market interest rate is 16%. How much will you pay for this bond. If the coupon was to be paid semi- annually will your answer be different. b) A U.S. investor obtains Ghana cedis when the cedi is worth $.33 and invests in a one-year money market security that provides a yield (in cedis) of 24%. At the end of one year, the investor converts the proceeds from the investment back to dollars at the prevailing spot rate of $.26. What is the effective yield earned by this foreign investor?
The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?
A bond with a nominal of EUR 400 000 000 and a maturity of 2 years has acoupon of 4.24%. The price of the bond is 96.5%. What is the coupon expressedin money (euro) in the second year? Calculate the yield of the bond (or writedown the equation with all number filled in). Can you use this yield to calculatethe current value (PV) of the coupon in year 2? Explain your answer.do not solve in excel. solve using YTM and spot rates Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.