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Consider a $1,000 par value bond, with no maturity. If the
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- If you have a coupon bond, its face value is $1,000 and the coupon rate is 4%. Complete the following table, then calculate the rate of return for the bond. If you know that it was purchased at the nominal value, comment on the results. due date return at maturity the price 2 0.02 3 0.04 5 0.06 Present Value Annuity value % n value % n 0.961 0.02 2 1.97 0.02 2 0.925 0.04 2 1.89 0.04 2 0.889 0.04 3 2.78 0.04 3 0.906 0.02 5 4.71 0.02 5 0.747 0.06 5 4.21 0.06 5The current zero-coupon yield curve for risk-free bonds is as follows: What is the price per $100 face value of a two-year, zero-coupon, risk-free bond? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) YTM View an example Get more help - % 5 J 1 5.01% B 6 Y MacBook Pro H 2 5.52% & 7 N Print U J * 8 3 5.78% Done M 1 ( 9 K 4 5.94% < V 20 0 5 6.06% X command V ↓ X Clear all 1 { + = Check answer deleteSuppose that you are considering investing in a 4-year bond that has a face value of $1,000 and a coupon rate of 5%. a.) If the market interest rate on similar bonds is 5%, the price of the bond is $nothing. (Round your response to the nearest cent.) The bond's current yield is nothing%. (Round your response to two decimal places.) b.) Suppose that you purchase the bond, and the next day the market interest rate on similar bonds falls to 4%. The price of the bond will be $nothing. (Round your response to the nearest cent.) The current yield will be nothing%. (Round your response to two decimal places.) c.) Now suppose that 1 year has gone by since you bought the bond, and you have received the first coupon payment. The market interest rate on similar bonds is still 4%. At an interest rate of 4%, the price an investor is willing to pay for the bond is $nothing. (Round your response to the nearest cent.) Your rate of return on the bond was nothing%.…
- Give typing answer with explanation and conclusion calculate the price of a bond, where F is the face value, c is the coupon rate, N is the number of years to maturity, and i is the interest rate. F=$10,000, c=7%, N- is infinity (bond never matures), i=6%Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows: (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) 1 4.45% 2 4.80% Yield to Maturity a. What is the price per $100 face value of a 3-year, zero-coupon, risk-free bond? b. What is the price per $100 face value of a 4-year, zero-coupon, risk-free bond? c. What is the risk-free interest rate for a 3-year maturity? Note: Assume annual compounding. a. What is the price per $100 face value of a 3-year, zero-coupon, risk-free bond? The price is $ (Round to the nearest cent.) b. What is the price per $100 face value of a 4-year, zero-coupon, risk-free bond? The price is $. (Round to the nearest cent.) c. What is the risk-free interest rate for a 3-year maturity? The risk-free rate is %. (Round to two decimal places.) C--- 3 5.06% 4 5.25% 5 5.38%Don't use chatgpt, Suppose a five-year, $1,000 bond with annual coupons has a price of $902.01 and a yield to maturity of 5.7%. What is the bond's coupon rate? The bond's coupon rate is ________%. (Round to three decimal places.) I will 5 upvotes
- 1. Suppose you purchase bond that has a coupon of $75, face value of S1,000, and current price of $1,100. What is your coupon rate? What is your current Save Answer yield? 2. Suppose you purchase a bond with a coupon of $50 for $1,010. You sell it one year later for $900. What rate of return did you carn?A new bond is just issued. The market price of this bond is $1,000. Then, the coupon rate of this bond is _____ its yield to maturity (YTM). Group of answer choices less than equal to greater than all of the above three choices are possibleConsider two bonds: Bond M and Bond L. Bond M pays a 6% coupon, while Bond L pays a 10% coupon. Interest rates are currently 8%. Suppose you have a friend who tells you that if rates rise to 12%, that the price of Bond M will rise and the price of Bond L will fall. Is your friend correct?
- What is the price of a bond that has a time to maturity of 4 years, a coupon rate of 3.3%, and a face value of $1,000, if the yield is 4.3%? (answer in dollars, with two decimal places but without the dollar sign, e.g. "983.23" is $983.23) Type your answer...Consider an economy with three dates (t=0,1,2) and two safe bonds. Bond A has 2% coupon and Bond B has 3% coupon. The payoffs and prices of the bonds are given as follows price at t=0 99.50 Bond A Bond B t=1 2 3 t=2 102 103 (a) Is there an arbitrage? (b) If yes, find an arbitrage portfolio. 100.25Suppose you looking at a certain bond whose current market price is $935. The bond has a 6.00% coupon rate, pays annual coupon payments and has a 12 year maturity. Assume also that the current open market YTM is 7.00%. Based upon this information, answer the following questions. [3 parts] Show all work. Clearly label your answers for Part A, Part B, and Part C. Carry all calculations out to four (4) decimal places (except dollars and cents). Highlight in bold your answer. a) Based upon the bond’s features, determine what the bond’s current price ($) should be. (Use the present value method to determine the price) b) Based upon your calculated price in Part 1, is the open market price of the bond correct? If the bond is over/under priced, by how much is the bond mispriced? c) Based strictly upon your answer in part 2, would you buy the bond? Explain your answer.