Calculate the durations and volatilities of securities A, B, and C. The interest rate is 8%, payments are made annually and the face value is $1,000. Security A is a 7-year 9% bond Security B is a 3-year 6% bond Security C is a 10-year 7% bond
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Calculate the durations and volatilities of securities A, B, and C. The interest rate is 8%, payments are made annually and the face value is $1,000. Security A is a 7-year 9% bond Security B is a 3-year 6% bond Security C is a 10-year 7% bond
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- Calculate the value of each bond and discuss whether it sells at par, discount, or premium. (Annual interest rate) O A. Bond Bond Value A B C O B. Bond A B C O C. Bond A B с O D. Bond A B C $1,149.39 Discount $1,000.00 Par $85.60 Premium Bond Value Sells at par/discount/premium Bond Value $1,149.39 Premium $1,000.00 Par $85.60 Discount Sells at par/discount/premium Bond Value Sells at par/discount/premium $1,149.39 Premium $1,000.00 Par $85.60 Premium Sells at par/discount/premium $1,049.39 Premium $1,100.00 Premium $85.60 Discount Bond Par value Coupon interest Years to rate maturity JA B IC $1000 14% $1000 18% $100 10% 120 16 18 Required return 12% 8% 13%Bond A and Bond B are 6% coupon bonds, and have a 7% YTM, and pays annually. Bond A is 1 year from maturity and Bond B is 3 years from maturity. Calculate the duration of Bond A.Assume that you have two bond investments and the information follows: Bond A has a par value of $8,000, interest paid semi annual, maturity 2 years, stated interest rate is 6%. Bond B has a par value of $8,000, interest paid semi annual, maturity 10 years, stated interest rate is 6%. The interest rates are increasing to 7%. Assume that you can only sell one of the bonds, which bond will you sell before the interest rate changes to 7%? Explain and support your answer with a present value calculation.
- Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $750, calculate the interest rate that the bond would yield to a bond buyer. Show all work.Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 Period Cash Flows 1 $20.73 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? $20.73 a. What is the maturity of the bond (in years)? The maturity is years.. (Round to the nearest integer.) 19 $20.73 .... 20 $20.73 + $1,000Bond A has the following terms: • Coupon rate of interest (paid annually): 12 percent • Principal: $1,000 • Term to maturity: Ten years Bond B has the following terms: • Coupon rate of interest (paid annually): 6 percent • Principal: $1,000 • Term to maturity: Ten years a. What should be the price of each bond if interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ b. What will be the price of each bond if, after five years have elapsed, interest rate is 12 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $ Price of bond B: $ c. What will be the price of each bond if, after ten years have elapsed, interest rate is 10 percent? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. Price of bond A: $
- K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): Period 2 Cash Flows 1 $20.34 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? $20.34 a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) b. What is the coupon rate (as a percentage)? The coupon rate is%. (Round to two decimal places.) c. What is the face value? The face value is $ (Round to the nearest dollar.) 19 $20.34 20 $20.34 + $1,000What are the steps and explanation for determining the current value of BondB that matures in 2 years and it has the same interest rate (yield) as Bond A. BondA matures in 1 year, has a current price (PV) of $800 and a face value (FV) of $1000.A bond is sold at a face value of $200 with an annual yield of 3%. How much will the bondholder have received in payment from the bond issuer after the bond has reached its maturity date of one year? $200 $406 $6 $206
- c) Suppose you observe the following three bonds. Assume that all bonds are denominated at $100 face value per contract and that they pay their coupons annually. Price Coupon Maturity (years) Bond A 111.42 15 3 Bond B 108.33 15 Bond C 116.61 15 1 i) Compute the spot rates r0,1, r0,2 and r0,3. ii) Compute the forward rates r1,2 and r2,3.Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): Period 1 2 29 30 Cash Flows $20.37 $20.37 $20.37 $20.37 + $1,000 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value?A bond: pay $75 each year in interest, and a $1,000 payment at maturity. The $1,000 is called? A) couponB) face valueC) discountD) yield