Below is a list of prices for zero-coupon bonds of various maturities. Price of $1,000 Par Maturity (Years) Bond (Zero-Coupon) 1 2 3 $974.85 882.39 847.70 a. A 5.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.) Yield to maturity % b. If at the end of the first year the yield curve flattens out at 6.5%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.) Holding-period return %

Below is a list of prices for zero-coupon bonds of various maturities. Price of $1,000 Par Maturity (Years) Bond (Zero-Coupon) 1 2 3 $974.85 882.39 847.70 a. A 5.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Round your answer to 2 decimal places.) Yield to maturity % b. If at the end of the first year the yield curve flattens out at 6.5%, what will be the 1-year holding-period return on the coupon bond? (Round your answer to 2 decimal places.) Holding-period return %

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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The following is a list of prices for zero-coupon bonds of various maturities. Maturity (years) Price of Bond 1 $ 953.40 2 903.47 3 852.62 4 787.66 Required: Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments.
Based on the following information for a bond, what is the bond's coupon rate? (EXCEL EQUATION IF POSSIBLE) Years to maturity 25 Par value 1000 Interest rate 0.1 current price 1200 Coupon payments are made semiannually. a. .1108 b. .1082 c. .1331 d. .1219
Vhat is the yield of each of the following bonds, E, if interest (coupon) is paid quarterly? of the following bond if interest (coupon) is paid quarterly? (Round to two decimal places.) Years to Maturity 6 Data Table Coupon Rate 6% 10 d of the following bond if interest (coupon) is (Click on the following icon o in order to copy its contents into a spreadsheet) Yedrsta Maturity 10 20 Yield to Maturity Years to Maturty Per Valud $5,000.00 $5,000.00 $1.000.00 $5,000.00 (Coupon ata 6% 8% Prico S3,740.00 $5,000.00 S800.00 $4.900.00 Coupon Rate 8% 20 5% 7% 30 25 Print Done
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The yield to maturity on 1-year zero-coupon bonds is currently 5%; the YTM on 2-year zeros is 6%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 7.5%. The face value of the bond is $100. Required: a. At what price will the bond sell? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will the yield to maturity on the bond be? Note: Do not round intermediate calculations. Round your answer to 3 decimal places. c. If the expectations theory of the yield curve is correct, what is the market expectation of the price for which the bond will sell next year? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. d. Recalculate your answer to part (c) if you believe in the liquidity preference theory and you believe that the liquidity premium is 1%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Price b. Yield to…
You are given the following information. All bonds are from the same issuer (same credit risk). Bond Coupon Rate Maturity Price ($) 6% 1036.17 5% 2 1041.49 C 6% 3 1074.21 All coupon payments are annual and face values are $1000. Answer the following and express rates as a %, to 2 decimal places a) Determine the 1-, 2- and 3-year spot rates from the given prices (Use the Bootstrapping method). 1- Year Spot rate is 2- Year Spot rate is 3- Year Spot rate is b) Compute the implied annual forward rate from year one to year two, i.e., f2 --> c) Compute the implied annual forward rate from year two to year three, i.e., f3 -->
need help with finding the current yield and capital gains yield for bond p and bond d, thank you
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A two-year bond with par value $1,000 making annual coupon payments of $98 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 7.8%, (b) 9.8%, (c) 11.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
What is the price of the bond given the information below. The bond makes semiannual interest payments. (Do not round intermediate calculations, round answer to two decimals, i.e. 32.16) Coupon Rate:8.5% YTM:9.5% Maturity (years):8 Par value: $2,000
Suppose that all bonds have $1,000 of face value. The current prices of zero coupon bonds are as follows: $960 for a one-year bond; $910 for a two-year bond; $850 for a three-year bond. a. What is the price of a three-year bond with 8% annual coupon payment? b. What is the YTM of the two-year zero coupon bond? c. Consider the following two-year bonds: (i) a zero coupon bond as above; (ii) a bond with 6% annual coupon payment. Whose YTM is higher?

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