Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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On the issue date, you bought a 30-year maturity, 5% semi-annual coupon bond. The bond then sold at YTM of 6%. Now, seven years later, a similar bond sells at YTM of 4%. If you hold the bond now, what is your realized
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- Suppose that for a price of $960 you purchase a 7-year Treasury bond that has a face value of $1,000 and a coupon rate of 4%. If you sell the bond one year later for $1,120, what was your rate of return for that one-year holding period? The rate of return for the one-year holding period was %. (Round your response to one decimal place.)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_forwardYou purchased a bond for 1,100. The bond has a coupon rate of 9 percent, which is paid semiannually. It matures in 17 years and has a par value of 1,000. What is your expected rate of return. How can i solve this with a financial calculator?arrow_forward
- An investor purchases a 3-year, 8% annual coupon bond at $90 and hold it to maturity. The face value is $100. The bond’s yield-to-maturity goes up from 10.40% to 12% straight after the purchase. What is the total interest on reinvested coupons? What is the investor’s rate of return?arrow_forwardYou are provided the following information about a bond that was issued 7 years ago. The bond has a par value of $1000, has 8 years until maturity, and carries a 10% coupon with interest being paid annually. What is the bond price today if we assume a theoretical discount rate of 0%?arrow_forwardSuppose you purchased a ten-year, 8% coupon bond(annual coupon payment) at $980. Two years later, you decide to take a vacation and sell the bond to acquire the necessary funds. At the time you sell the bond, eight-year bonds with similar characteristics sell for yields of 9%. What is your realized yield on the bond?arrow_forward
- At the beginning of the year, you bought a $1,000 par value corporate bond with an annual coupon rate of 8 percent and a maturity date of 19 years. When you bought the bond, it had an expected yield to maturity of 13 percent. Today the bond sells for $ 760. 1. What did you pay for the bond? 2. If you sold the bond at the end of the year, what would be your one-period return on the investment? Assume that you did not receive any interest payment during the holding period.arrow_forwardAn investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond Y matures in 19 years, while Bond A matures in 1 year. 1. What will the value of the Bond Ybe if the going interest rate is 7%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond A at its maturity and that 19 more payments are to be made on Bond Y. Round your answers to the nearest cent.arrow_forwardHelp me pleasearrow_forward
- 1. You buy a 6 year bond with an annual 5% coupon at par value, $1000. If the yield to maturity at the end of the first year changes to 3% what is the end of the year value of the bond(after the coupon payment, remember: bond value does not include this coupon)? 2. Calculate the value of a 6 year 2% coupon bond with semiannual payments, 1000 par. Expected return is the risk free rate of 3%. 3. Price a 5 year 4% semiannual coupon bond if the yield to maturity is 6% (write the price as if par is 100, use 5 decimal places)arrow_forwardSuppose that you bought a 14% Drexler bond with time to maturity of 9 years for $1,379.75 (semiannual coupons, interest rate=8%). After another ½ year, you sold the bond. Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment? If the interest rate dropped by 25 basis points, what would the selling price be? What would the rate of return from this investment be?arrow_forwardYou purchased a bond for 725. The bond has a coupon rate of 8 percent, which is paid semiannually. It matures in 6 years and has a par value of 1,000. What is your expected rate of return?arrow_forward
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