Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4 percent, the future value of the bond (the amount the bond pays in one year) is? a. P1,560.00 b. P1,540.00 c. P1,440.00 d. 1,442.31
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Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4 percent, the future
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- Consider a one-year discount bond that has a present value of P1,500. If the rate of discount is 4 percent, the future value of the bond (the amount the bond pays in one year) is * P1,560.00 P1,540.00 P1,440.00 O P1,442.31According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three-year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: Oa. 6.0% O b. 15.0% Oc. 5.0% O d. 4.0%According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three- year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: O a. 5.0% O b. 15.0% O c. 4.0% O d. 6.0%
- Listen Assume that there is a bond that pays $20.00 at the and of year 2, and $105.00 at the end of year 7. It sells at a total =$(20.00+105.00). The Macauley duration of the bond is? Answer with two digits decimal accuracy. Blank Excel Worksheet Your AnswerUsing the information in Question 14 above, estimate the price of the bond for a 200 basis-point increase in interest rates. O A. $936 B. ³. $1002 C. $964 D. $1012Suppose the current interest rate on a one-year bond is 2% and the current interest rate on a two-year bond is 4%. The term premium on a two-year bond is 1%. According to the expectations hypothesis, what interest rate should we expect on a one-year bond next year? Answer as a percentage to one decimal place and do not include symbols (e.g. $, %, commas) in your answer. Answer:
- 5. Look at the following data: i l-year bond, ti" t+1 5 percent premium = 0 i't +2 i't +3 5.78 percent 5.88 percent 5.65 percent premium = 0.10 premium = 0.22 premium = 0.33 Based on the data, do the following: a. Compute the interest rate on a 2-year, 3-year, and 4-year bond using expectations theory and then draw the corresponding yield curve. b. Compute the interest rate on a 2-year, 3-ycar, and 4-year bond using preferred habitat theory and then draw the corresponding yield curve.According to the expectations theory of the term structure of interest, if the 1-year bond rate today is 6% p.a. and the 2-year bond rate today is 7% p.a., what is the 1-year bond rate next year? A. 6% B. 6.75% C. 7.5% D. 8%If the annual interest rate printed on the face of a bond is 10 percent, the face value of the bond is $1,000, and you purchase the bond for $1,250, what is the current yield on the bond? O A. 5 percent. O B. 6 percent. OC. 12.5 percent. O D.8 percent.
- Consider the following figure which shows the relationship between a three-year bond's price (vertical axis) and the passage of time (measured in years - horizontal axis). $106.000 $104.000 $102.000 $100.000 $98.000 $96.000 $94.000 594.846 0.00 S96.688 598.567 0.50 Bond Price as Time Passes $100.4 1 $102.433 $96.433 1.00 $98.307 $100.217 1.50 $102.13 58148 2.00 Which of the following statements are consistent with the figure above? $104.148 $100.055 $106.000 $101.99 250 $103.980 This pattern of prices is consistent with a bond whose yield to maturity is below the band's coupon rate. This bond pays a coupon of $8. This bond pays coupons on an annual basis. None of the other statements are correct. 100A bond promises to pay $150 in one year. What is the interests rate on the bond if its price today is $65,$75 and $85?Which will you prefer to invest your $1,50O: a) a two year bond with interest rate of 9 percent or b) two one year bonds, Year 1, the bond will earn 8% and year 2 the second bond will earn 9%. Which bond will you buy?