Consider a $1200 bond that makes $30 annual coupon payments. If the interest rate is 2 percent and the bond matures in two years, what is the bond's present value? Carefully follow all mathematical instructions. Round intermediate steps to four decimal places and your final answer to two decimal places.
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Consider a $1200 bond that makes $30 annual coupon payments. If the interest rate is 2 percent and the bond matures in two years, what is the bond's present value?
Carefully follow all mathematical instructions. Round intermediate steps to four decimal places and your final answer to two decimal places.
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- A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond’s price? b) What is the bond’s duration? c) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield. d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).If the current price of a bond is greater than its face value: A) There is no right answer. B) the yield to maturity must be larger than the current yield. C) the coupon rate must be equal to the current yield.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 works Solve economic
- Last year you purchased a bond with an interest rate of 5 percent. Now the interest rate on the bond market drops to 4%. Then the face value of your bond is lower. people can offer a lower price to buy your bond today. the interest rate you are earning from this bond is lower. you will receive the same amount of coupon payments from the issuer while you are holding the bond. your return on this bond will be higher later when you hold it to the maturity date.Economics You are planning to take out a 5 hundred thousand dollar fixed-rate mortgage with a 30- year term and a stated annual mortgage rate of 5.7 percent. Your lender offers to lower your stated annual interest rate by one-quarter of a percentage point for each discount point you buy. What will your monthly payment be if you buy 3 discount points? Round your answer to the nearest dollar. Answer the following based on the information from the previous question. Approximately how many months do you need to stay in the mortgage to make it worthwhile to pay the discount points? Round your answer to two decimal places.If the interest rate is 20 percent, what is the present value of a bond that matures in two years, pays $85 one year from now, and pays $1,085 two years from now? The present value of the bond is $ (Enter your response rounded to the nearest cent.)
- Calculate the current yield on a bond that has an annual interest payment of $200 and a resale price of $1,550Consider a bond with a three-year remaining maturity. A. If somehow the face value of the coupon is $10,000 and the annual payment is $500. If the yield to maturity is 6%, what would the price of this bond be? b. Considering your response to question (a), is the coupon rate higher, lower, or the same as the yield to maturity? Why?Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the coupon rate of interest is 5%. If the current market price of this bond is $225,000, what is the yield to maturity? If the market price of the bond increases to $240,000, what happens to the yield to maturity?
- Your financial adviser recommends buying a 10-year bond with a face value of $1,000 and an annual coupon of $55. The current interest rate is 6 percent. What might you expect to pay for the bond (aside from brokerage fees)? Instructions: Enter your response rounded to the nearest whole number. Round intermediate calculations to two decimal places. $.The price of a bond with no expiration date is originally $1,000 and has a fixed annual interest payment of $150. If the price of the bond then falls by $250, what will be the interest rate yield to a new buyer of the bond?You are going to invest $1,500 today in a fund today. After 10 years, you want to have exactly $2,500 in the fund. If the interest rate is compounded annually, what interest rate is needed to achieve this?