Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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If you purchase a 5-year, zero-coupon bond for $691.72, how much could it be sold for 3 years later if interest rates have remained stable?
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- Mansukhbhaiarrow_forwardSuppose the U.S. Treasury offers to sell you a bond for $2,000. No payments will be made until the bond matures 15 years from now, at which time it will be redeemed for $4,000. What interest rate would you earn if you bought this bond at the offer price?arrow_forwardNarrow_forward
- What is the present value of a $1000 future amount received in 17 years if the appropriate discount rate is 11.7% APR? (FYI: This problem computes the value of a 17 year, $1000 zero coupon bond, although it is phrased in time value of money language, rather than bond language.) Answer to 2 decimal points.arrow_forwardYou are considering a 25 year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nonimal rate) of 11.6645%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forward4. You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. What is the rate of return on your investment if the bond pays interest annually? (Round your answer to the nearest whole percent.)arrow_forward
- 4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…arrow_forwardYou have a $1000 bond at 5% (coupon rate) that matures in 7 years and pays interest annually. You want to sell it, but the current interest rate on a similar investment that matures in 7 years is now paying 6% interest. What is the current value of your bond?arrow_forward3. What is the present value of a $20,000 payment you would receive 5 years from now, assuming an annual interest rate of 7%? 4. What is the future value 6 years from now of $15,000 you hold today when the annual interest rate is 4%? 5. What is the current price of a discount bond with a face value of $10,000 and an interest rate of 6%? 1arrow_forward
- You are considering a 15-year, $1,000 par value bond. Its coupon rate is 10%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 7.1225%, how much should you be willing to pay for the bond? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forwardA $1,000 bond has a 7.5 percent coupon and matures after ten years. If current interest rates are ten percent, what should be the price of the bond? If after six years interest rates are still ten percent, what should be the price of the bond? Even though interest rates did not change in a and b, why did the price of the bond change? Change the interest rate in a and b to 6 percent and rework your answers. Even though the interest rate is 6 percent in both calculations, why are the bond prices different? Use semi- annual interest payments if it applies to any of these questions. Im completely lost on this.arrow_forwardWhat price would you pay for a 10-year, AA bond with a Face Value of $1,000 and a coupon rate of 7.10%?arrow_forward
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