I buy a 7 yr par bond paying 8% annual. What is the YTM? If I wait 1 year and sell it at a YTM of 7%, do I sell the bond for a premium or a discount?
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I buy a 7 yr par bond paying 8% annual. What is the YTM? If I wait 1 year and sell it at a YTM of 7%, do I sell the bond for a premium or a discount?
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- You are considering the purchase of a perpetual bond that pays you $174 per year for the foreseeable future. If you require a 5.85% rate of return on this bond investment, what is a fair price for the bond that you would be willing to pay today? To nearest $0.01You own a bond that will pay $103, 6 years from today, and $211, 8 years from today. Your discount rate is 7%. What is the present value of the bond?You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You initially pay $950 for the bond. You receive an annual interest payment after one year, then sell the bond for $880. What is your total rate of return on the investment, expressed as a percentage of the purchase price?
- You pay $25.00 for a bond which can be redeemed in 20 years for $50.00. What annual ratedoes this bond pay?You purchase a 6%, 20-year annual coupon bond for its face value. You will hold this bond for two years in your portfolio (till you receive coupon payments for both years), after which you will sell it. After two years, the market rate is 7%. How much will your bond sell for? What will be your percentage return?How much will a $49,200 EE savings bond cost when you initially purchase it? Assuming the bond earns 2.69 percent annually, approximately how long will it take for the bond to reach its stated face value? When you initially purchase it, the EE saving bond will cost $ 24,600. (Round to the nearest dollar.) Assuming the bond earns 2.69 percent annually, the length of time it will take for the bond to reach its stated face value is years. (Round to one decimal place.)
- 4. You buy a 4% 10-year $1,000 face value bond for $1,148.14. A year later, you sell the bond for $1,200. What is your rate of return on the bond for the year?Assume you will be paying $10,000 per year in tuition expenses at the end of each of the next two years. Bonds currently yield 8%. a) What is the present value and duration of your obligation? b) What maturity zero-coupon bond would immunize your obligation? c) Suppose you buy a zero-coupon bond with value and duration equal to that of your obligation. Now suppose that interest rates immediately increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? d) What happens to your net position if rates instead fall to 7%?You will be paying $8,600 a year In tultion expenses at the end of the next two years. Bonds currently yleld 7%. Q. What is the present value and duration of your obligation? b. What maturity zero-coupon bond would Immunize your obligation? c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately Increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tultion obligation? d. What if rates fall Immediately to 5% ? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) \table[[,,,],[Present value,,,,,],[Duration,,years,,,]]
- You purchase a 6%, 20-year annual coupon bond for its face value. You will hold this bond for two years in your portfolio (till you receive coupon payments for both years), after which you will sell it. After two years, the market rate is 7%. How much will your bond sell for? What will be your percentage return? a. $899.41 and 1.94% respectively b. $1,000 and 0% respectively c. $899.41 and -4.06% respectively d. $894.06 and 1.41% respectivelyA bond costs $925, with a face value of $1000 and pays 4% of the face value each year. If the bond will be paid off at the end of 10 years and your MARR is 5%, should you buy the bond? Please solve using NPV method if possible, and please do without excel or calculators since I'm trying yo understand the topic . Thank you!At retirement you liquidate your account and use the funds to buy an investment grade bond which makes $50,000 annual coupon payments based on a 6 % coupon rate throughout your retirement years. What is the face value, not the actual value, of the bond that you will be investing in?