Consider a corporate bond with a $1000 face value, 10% coupon with semiannual coupon payments, 8 years until maturity, and a YTM (APR) of 8 %. It has been 50 days since the last coupon payment was made and there are 182 days in the current coupon period. a) What is the clean price for this bond? b) What is the dirty (cash) price?

Consider a corporate bond with a $1000 face value, 10% coupon with semiannual coupon payments, 8 years until maturity, and a YTM (APR) of 8 %. It has been 50 days since the last coupon payment was made and there are 182 days in the current coupon period. a) What is the clean price for this bond? b) What is the dirty (cash) price?

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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Suppose the face value of a bond which matures in seven years is $5,000, and pays a coupon of $75. Suppose the bond was purchased at a price of $2,000, and the price is estimated to be constant the entire time until maturity. What will be the rate of return on the bond? 40% 4% .0375% 3.75%
A zero-coupon bond has a $100 face value, matures in 10 years and currently sells for $781.20 . a What is the market’s required return on this bond? b Suppose you hold this bond for one year and sell it. At the time you sell the bond, market rates have increased to 3.5%. What return did you earn on this bond? c Suppose that, rather than buying the 10-year zero-coupon bond described at the start of this problem, you instead purchased a 10-year 2.5% coupon bond. (Assume annual payments.) Because the bond’s coupon rate equalled the market’s required return at the time of purchase, you paid face value ($100) to acquire the bond. Again assume that you held the bond for one year, received one coupon payment, and then sold the bond, but that at the time of sale, the market’s required return was 3.5%. What was your return for the year? Compare your answerhere to your answer in part (b).
how does the equation for valuing a bond change if semiannual payments are made? find the value of a 10-year, semiannual payment, 10% coupon bond if nominal rd equal 13%.
A risk-free, zero-coupon bond with a $1000 face value has 2 years to maturity. The yield to maturity of this bond is 2%? What is the fair price to pay for this bond?
K Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.0% (annual payments). The yield to maturity on this bond when it was issued was 6.0%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment? KIER After the first coupon payment, the price of the bond will be $. (Round to the nearest cent.)
What is the Macaulay duration of a semi-annual bond with a coupon rate of 7 percent, five years to maturity, and a current price of $959? What is the modified duration? Duration is __. years. Modified duration is __ years.
Suppose a ten-year, $1,000 bond with a 8.9% coupon rate and semiannual coupons is trading for$1,035.32. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.4% APR, what will be the bond's price? The bond's yield to maturity is ______%. (Round to two decimal places.)
A 25-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 8%. a. What is the bond's yield to maturity if the bond is selling for $1,050? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturity b. What is the bond's yield to maturity if the bond is selling for $1,000? Yield to maturity c. What is the bond's yield to maturity if the bond is selling for $1,250? (Do not round intermediate calculations. Round your answer to 3 decimal places.) Yield to maturity
A zero-coupon bond has a $100 face value, matures in 10 years and currently sells for $781.20 . a What is the market’s required return on this bond? b Suppose you hold this bond for one year and sell it. At the time you sell the bond, market rates have increased to 3.5%. What return did you earn on this bond? c Suppose that, rather than buying the 10-year zero-coupon bond described at the start of this problem, you instead purchased a 10-year 2.5% coupon bond. (Assume annual payments.) Because the bond’s coupon rate equalled the market’s required return at the time of purchase, you paid face value ($100) to acquire the bond. Again assume that you held the bond for one year, received one coupon payment, and then sold the bond, but that at the time of sale, the market’s required return was 3.5%. What was your return for the year? Compare your answerhere to your answer in part (b)
Suppose a 6-year zero-coupon bond offers a payment of $1,800 and thecurrent market interest rate for this bond is 8%. What is the price of this bond?
A corporate bond with annual coupons has a face value of $1,000, 4 years to maturity and a coupon rate of 8%. The market interest rate for similar bonds is 0.095. What is the bond's duration?
1. Consider a real return bond with a face value of $15,000 and a coupon yield of 5.2%. What is the coupon payment after one year if the inflation rate is 6.8%? Select one: a) $817.44 b) $833.04 c) $825.24 d) $809.64 I

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