Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- You have purchased a U.S. Treasury bond for $3,000. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5,000. What interest rate will you earn on this bond? 3.82% 4.25% 4.72% 5.24% 5.77%arrow_forwardShow me the steps with explanations to calculate the current interest rate of a bond that is currently priced at $900 and has a FV of $1450 and matures in 5 years.arrow_forwardUsing 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. $1012arrow_forward
- You have purchased a U.S. Treasury bond for $3,150.00. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5,150. What interest rate will you earn on this bond? Group of answer choices 6.18% 5.04% 3.73% 5.67% 4.46%arrow_forwardWhat is the Macaulay duration of a $1 per year annuity-immediate payable for 10 years based on an annual interest rate of 5%? It can be calculated using the below formula, Macaulay Duration Formula t-C n-M + (1+y) (1+y) с Current Bond Price Macaulay Duration tx C + Macaulay = Duration Formula (1+ y) nxM (1+ y)n Current Bond Price 13arrow_forwardA bond has the following terms: Principal amount $1,000 Semi-annual interest $45 Maturity 15 years a. What is the bond's price if comparable debt yields 11%? b. What would be the price if comparable debt yields 11% and the bond matures after ten years? c. What would be the bond's price in a. and b. if interest rates declined to 8 % ?arrow_forward
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