Problem 7-4 Bond Yields [LO2] A Japanese company has a bond outstanding that sells for 94 percent of its ¥100,000 par value. The bond has a coupon rate of 5.3 percent paid annually and matures in 15 years. What is the yield to maturity of this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity %

Problem 7-4 Bond Yields [LO2] A Japanese company has a bond outstanding that sells for 94 percent of its ¥100,000 par value. The bond has a coupon rate of 5.3 percent paid annually and matures in 15 years. What is the yield to maturity of this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity %

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

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Problem 8.15 Marshall Company is issuing eight-year bonds with a coupon rate of 7.85 percent and semiannual coupon payments. If the current market rate for similar bonds is 9.53 percent. What will be the bond price? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and bond price to 2 decimal places, e.g. 15.25.) Bond price If the company wants to raise $1.25 million, how many bonds does the firm have to sell? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and number of bonds to 0 decimal places, e.g. 5,275.) Number of bonds bonds
Question 2 Two bonds are available for purchase in the financial markets. The first bond is a two-year, 50,000 AUD bond that pays an annual coupon of 6 per cent. The second bond is a two- year, 10,000 AUD, zero-coupon bond. (a) What is the duration of the coupon bond if the current yield-to-maturity (R) is 6 per cent? And 8 per cent? How does the change in the current yield to maturity affect the duration of this coupon bond? (b) Calculate the duration of the zero-coupon bond with a yield to maturity of 5 per cent, and 8 per cent.
Problem 6-6 Bond Yields (LO1, 2) A bond with a face value of $1,000 has 8 years until maturity, has a coupon rate of 6.0%, and sells for $1,075. a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.) Current yield % b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) Yield to maturity c. What is the yield to maturity if interest is paid semiannually? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) Yield to maturity
Question 5 0/1 Oscorp has just issued its Norman Special Long Bond. The bonds have a maturity of 25 years, a coupon rate of 0.50% and pay the coupon on a semi-annual basis. The face value of the bond is $1000. The bonds are trading at a YTM of 5.00%. What is the current yield of these? (Enter your answer as a % accurate to two decimal points. DO NOT add a % symbol or any extraneous punctuation.)
Problem 6-16 Bond Returns (LO2, 3) A bond has 10 years until maturity, a coupon rate of 9%, and sells for $1,100. Interest is paid annually. (Assume a face value of $1,000.) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
Problem 6-3 Bond Prices [LO 2] Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 7 years to maturity, and a coupon rate of 7.8 percent paid annually. If the YTM is 9.8 percent, what is the current bond price in euros? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current bond price
Problem 6-3 Bond Prices [LO 2] Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 7 years to maturity, and a coupon rate of 8.8 percent paid annually. If the YTM is 10.8 percent, what is the current bond price in euros?
Problem 6-16 Bond Returns (LO2, 3) A bond has 10 years until maturity, a coupon rate of 8.6%, and sells for $1,140. Interest is paid annually. (Assume a face value of $1,000.) a. If the bond has a yield to maturity of 9.4% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. Price b. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Rate of return % c. If the inflation rate during the year is 3%, what is the real rate of return on the bond?
QUESTION 3 The market price of a bond is $1,119.90; it has 4 years to maturity, a $1,000 par value, and pays a coupon of $100 every year. What is the yield to maturity? (assume the coupons are paid annually). A. 3.27% B. 6.50% C. 6.54% D. 10.00% E. None of the above
Question 8 A 25-year R1 000 par value bond has an 8,50% annual coupon. The bond currently sells for R875. If the yield to maturity remains at its current rate, what will the price be five years from now? 1. R 675,53 2. R 882,90 3. R 948,16 4. R10 915,78
Problem 8.9 Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 7.42 percent. If these bonds have a market price of $886.11, what yield to maturity and effective annual yield can she expect to earn? (Round answer to 2 decimal places, e.g. 15.25%.) Yield to maturity Effective annual yield % Click if you would like to Show Work for this question: Open Show Work
Problem 7-30 Holding Period Yield (LO2) The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). (Round the final answers to 2 decimal places.) a. Suppose that today you buy an 9.8% annual coupon bond for $1,240. The bond has 19 years to maturity. What rate of return do you expect to earn on your investment? Expected rate of return % b-1. Two years from now, the YTM on your bond has declined by 1%, and you decide to sell. What price will your bond sell for? (Omit $ sign in your response.) Bond price b-2. What is the HPY on your investment? HPY %

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