Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 7 percent paid annuallly. If the yield to maturity is 10 percent, what is the current price of the bond? |
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- The U.S. Treasury has issued 10-year zero coupon bonds with a face value of $1,000. Assume that the bond compounds interest semiannually. What will be the current market price of these bonds if the yield to maturity for similar investments in the market is 6.75 percent? $860 O $520 O $604 O $515arrow_forwardEven though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 6 years to maturity, and a coupon rate of 8.9 percent paid annually. If the YTM is 10.9 percent, what is the current bond price in euros? Can this be solved only with excel or I can use a financial calculator?arrow_forwardA federal government bond with a 16-year maturity and an annual coupon rate of 10% (coupons are paid semi-annually) currently trade on the basis of a yield to maturity of 8%. You decide to buy this bond now. You intend to resell it in exactly 5 years, and you believe that it will then trade on the basis of a yield to maturity of 11%. What return (effective annual) do you hope to achieve on this investment if you anticipate reinvesting the coupons received at the rate of 8% nominal compounded semi-annually?arrow_forward
- i need help with part B please. A government bond with 2 years until maturity has a face value of £120,000 and anannual nominal coupon rate of 1%. Assume that the relevant nominal market interestrate (annualized) is equal to 5%. The coupon payments are made every 6 months.(a) Calculate the present value of the bond. (b) Assume the individual coupons are stripped from the bond and soldseparately as zero coupon bonds. Calculate the market value of these zero couponbonds. Assume there are no further changes to the market rate. How would youexpect the price of the bond to evolve?arrow_forwardPlease help answer this question.arrow_forwardAn insurance company must make payments to a customer of $20 million in 1 year and $8 million in 5 years. The yield curve is flat at 10%. If it wants to fully fund and immunize its obligation to this customer with a single issue of a zero-coupon bond, what maturity bond must it purchase? (in years, use four decimal places) What must be the face value and market value of that zero-coupon bond? (in millions, use two decimal places)arrow_forward
- A)A US corporate bond has a coupon rate of 4% and a face value of $1000 and will mature in 4 years. The current yield on similar bonds is 3%. Calculate the value of the corporate bond assuming bonds are paid annually. B) calculate the duration of the US corporate bondarrow_forwardEven though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 7.3 percent paid annually. If the yield to maturity is 8.4 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Bond pricearrow_forward(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 14 years has a $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 13 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ (Round to the nearest cent.)arrow_forward
- Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 7 years to maturity, and a coupon rate of 7.3 percent paid annually. If the YTM is 9.3 percent, what is the current bond price in euros?arrow_forward(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 20 years has a $1,000 par value. The annual coupon interest rate is 15 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ (Round to the nearest cent.)arrow_forward(Related to Checkpoint 9.4) (Bond valuation) A bond that matures in 15 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 16 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually? a. The value of this bond if it paid interest annually would be $ (Round to the nearest cent.)arrow_forward
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