Over the past year (from one year ago to today), the inflation rate was 3.26% the risk-free rate was 5.54% and the real rate of return for a bond was 10.13%. The bond is currently priced at $889.00 pays annual coupons of $109.00 and just made a coupon payment. What was the price of the bond one year ago? $877.59 (plus or minus $1.00) $917.28 (plus or minus $1.00) $906.20 (plus or minus $1.00) $862.80 (plus or minus $1.00) None of the above is within $1.00 of the correct answer

Over the past year (from one year ago to today), the inflation rate was 3.26% the risk-free rate was 5.54% and the real rate of return for a bond was 10.13%. The bond is currently priced at $889.00 pays annual coupons of $109.00 and just made a coupon payment. What was the price of the bond one year ago? $877.59 (plus or minus $1.00) $917.28 (plus or minus $1.00) $906.20 (plus or minus $1.00) $862.80 (plus or minus $1.00) None of the above is within $1.00 of the correct answer

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

A bond is trading at 99.5 with 5.4 years left until maturity. Semi-annual coupon payments are 30.25 and the face value is, as always, 1,000. What is the coupon rate?
You bought one of Great White Shark Repellant Company's 8.2 percent coupon bonds one year ago for $1,050. These bonds make annual payments and mature 13 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 7 percent. The bonds have a par value of $1,000. If the inflation rate was 2.2 percent over the past year, what was your total real return on investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Suppose the coupon rate is 10% issue at par $1000 and for 15 years. Let say the market interest rate decreased to 5% after the bond was issued a) What is the interest payment for this bond annually b) What is the interest payment on semi-annually c) How much should the investors pay for this bondi.e. the value
Toyota just issued ten-year bonds that make annual coupon payments of R50. Suppose you purchased one of these bonds at par value when it was issued. Right after your purchase, market interest rates jumped, and the YTM (interest rate) on your bond rose to six percent. What is the new price of you bond
Forrest Co. issued 11-year bonds 3 years ago at a coupon rate of 8.5%. The bond makes semi-annual payments. If the required rate of return of an investor on these bonds is 9%, what will the bond sell for today?
Yesterday you paid $1000 for a 6% coupon, $1000 face value 5-year bond. It is callable at the end year 1(after it makes the first year-end coupon payment) for $1100. The annual discount rate on this bond has just fallen to 2%. What will this bond be selling for today? If you had intended to hold this bond until it matured, how much money did the call provision cost you in total over all five years?
Komi, Inc. has an 8% semi-annual bond that is priced at $1,060.47. The YTM on the bond is 7%. How many years do these bonds have until they mature? One year later, the yield in the market has fallen to 6 percent. What is the price of the bond now?
Assuming the coupon rate is 10% issue at par $1000 and for 15 years. Let say the market interest rate decreased to 5% after the bond was issued d) What is the interest payment for this bond annually e) What is the interest payment on semi-annually f) How much should the investors pay for this bondi.e. the value
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.5% (annual payments). The yield to maturity on this bond when it was issued was 6.1%. What was the price of this bond when it was issued? When it was issued, the price of the bond was $ (Round to the nearest cent.)
Oscorp's Norman Special Long Bond have a coupon rate of 0.50% and pay the coupon on a semi - annual basis. The face value of the bond is $1000. You purchased these bonds one year ago at a YTM of 7%. At that time the bonds had a maturity of 25 years. Today the bonds are trading at a YTM of 7.50%. What is the total bond return?
You bought a 25-year, 6.8% semi-annual coupon bond today and the current market rate of return is 5.3%. The bond is callable in 7 years with a $1,087 call premium. What price did you pay for your bond? (Show your answer to nearest cent with no comma. For example $1,378.565 is entered as 1378.57)
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.8% (annual payments). The yield to maturity on this bond when it was issued was 6.3%. What was the price of this bond when it was issued? When it was issued, the price of the bond was $1,108.85 (Round to the nearest cent.)

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS