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For a 1 year tbill..
with a coupon of 0.75
n = 1
face value = 98.503
market price = 98.434
what is the yield of the bond
Step by step
Solved in 2 steps with 2 images
Does the formula change when you change the value of n given that you use continuous compounding.
For example with a 2 year tbill....
n = 2
coupon = 1
ask price = 96.964
bid price = 96.904
by Bartleby Expert
- The function s(t) = 0.035 +0.003f gives the effective annual rate of a zero coupon bond of maturity t, with i in years. Find the price of a 2 year coupon bond with semiannual coupons of 7.5% and a face/redemption value of $700,000.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 52. Consider a bond with a 7.5% annual coupon rate and a face value of $1,000. Calculate the bond price and duration & show your work. Years to Maturity Interest rate Bond Price Duration 4 6. 6. 9. What relationship do you observe between yield to maturity and the current market value? What is the relationship between YTM and 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 IA n-year annual coupons bond with coupon rate r per year. The yield rate is 0.10. Calculate the Macaulay duration of the bond for all four possible combinations of parameters: • n = 10 or 30 • r = 0.05 or 0.15Suppose an 6% semi-annual coupon, 20-year bond is selling for R1,201.74. What is the Bond Equivalent Yield?
- Suppose a bond with a 12% coupon rate and semiannual coupons, has a face value of $1,000, 10 years to maturity and is selling for $1,197.93. Calculate: A. Current yield, and B. YTM if the price of the bond in one year is $2,014.83 STEPS MAY INCLUDE USE OF FINANCIAL CALCULATOR (BA 2 PLUS)2. A bond pays semi-annual coupons with c(2) = .085. Assume the face value equals $10,000 and matures in 4 years. The YTM of the bond is given as i(2) = .07. Construct the amortization table for this bond. 3. Calculate the price of the bond in problem #2 above at time t=1/2.Consider 3-year 6% bond with the par of $100 and semi- annual coupon payments. The YTM of the bond is 8%. Also, suppose that the dollar duration is 253.96. What would be the bond price if the yield were 9%? What would be the price change due to duration? What would be the price change due to convexity? Price = 97.26; Change due to Duration = +2.54; Change due to Convexity = -0.04 Price = 96.84; Change due to Duration = +2.12 ; Change due to Convexity = -0.04 Price = 92.26; Change due to Duration = -2.54; Change due to Convexity = +0.04 Price = 92.68; Change due to Duration = -2.12 ; Change due to Convexity = +0.04
- Compute the Macaulay duration, modified duration and convexity of a coupon bond with face value F = 100, current price P 100, current price P = 92, maturity T I = 8% 4 years, that pays a semi-annual coupon of C =You have decided to invest in Bond x, an n-year bond with semi-annual coupons and the following characteristics: Par value is 1000 The ratio of the semi - annual coupon rate to the desired semi- annual yield rate, is 1.03125. The present value of the redemption value is 381.5. Given v=0.5889, what is the price of bond x ? A) 1,055 B) 1,072 C ) 1,073 D) 1,069 E) 1,044Assume that the yield curve is YT = 0.04 + 0.001 T. (a) What is the price of a par - $1,000 zero - coupon bond with a maturity of 10 years? (b) Suppose you buy this bond. If 1 year later the yield curve is YT = 0.042 + 0.001 T, then what will be the net return on the bond?