QUESTION 5"A coupon bond that pays interest quarterly has a par value of $1000, matures in 5 years, and has a yield to maturity of12%. If the coupon rate is 10%, the value of the bond today will beNote: Express your answers in strictlynumerical terms. For example, if the answer is $500, write enter 500 as an answer."

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Answered: QUESTION 5 "A coupon bond that pays…

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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QUESTION 2 Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the yield to maturity of the bond? A. 30% B. 0% C. 35.4% D. 100.2%
QUESTION 1 "A coupon bond that pays interest annually has a par value of $1000, matures in 6 years, and has a yield to maturity of 6%. If the coupon rate is 15%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer." QUESTION 2 "A coupon bond that pays interest quarterly has a par value of $1000, matures in 4 years, and has a yield to maturity of 15%. If the coupon rate is 8%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer." QUESTION 3 "What is the coupon payment of a 4-year $1000 bond, 9% YTM, and with a 2% coupon rate and semiannually payments? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer." QUESTION 4 "Consider a zero-coupon bond with $100 face value and 5…
Question 3 (Bond and Equity Valuation) Bond A is a $1,000, 6% quarterly coupon bond with 5 years to maturity. (a) If you bought Bond A today at a yield (APR) of 8%, what is your purchase price? Is this a premium or discount bond? Why? (b) One year later, Bond A's YTM (APR) has gone down to 6% and you sell it immediately after receiving the coupon. (i) What is the current yield? (ii) What is the capital gains yield? (iii) What is the one-year total rate of return (in APR) if the coupons are reinvested at 2% per quarter during the holding period? (iv) Can Bond A’s one-year total rate of return be determined correctly by simply adding up the current yield and the capital gains yield? Explain your answer without calculations.
Question 4 The following is a list of prices today for bonds with different maturities. Face value is 100. Assume that the bonds pay their coupons annually, and that the YTMs in the table are annualized and compounded annually. Both coupon rate and yield to maturity (YTM) is in percent. Maturity (years) Price Coupon rate YTM 1 98.00 0 ?2 100 ? 5.00 3?9 6.00 Fill in the missing values in the table.What are the annualized spot rates for years 1 & 2 (r1 & r2)? Given r1 & r2, what is the price of a 2-year coupon bond with annual coupon rate of 7%? What is the duration of this bond?
Question 1 Graystone bonds have a maturity value of RM100. The bonds carry a coupon rate of 10 percent. Interest is paid semi-annually. The bonds will mature in nine years. If the current market price is RM96.50, a.what is the yield to maturity on the bond? b.what is the current yield on the bond? Give typing answer with explanation and conclusion
Question 4 What is the price of a straight bond with: $1,000 face value, coupon rate of 5%, a YTM of 5%, and a maturity of 37 years? (round your final answer to 1 decimal place: 20.456 -->20.5) Your Answer:
Question 4 (a) Consider a 3-year forward contract to buy a coupon-bearing bond thatwill mature 3-years from today. The current price of the bond is $120. Suppose that on that bond 3 coupon payments of $10 are expected after 12, 24, and 36 months. We assume that the 12M, 24M, and 36M risk-free interest rates (continuously compounded) are 1.75%, $2.1, and 2.5% per annum, respectively. Determine the strike price, the forward price and the value of the forward contract.(b) 18 months later, the price of the bond is $105 and the risk-free interest rates for maturity 6M and 18M (continuously compounded) are 1.1% and 1.9% per annum, respectively. What are the strike price, the forward price and the value of the forward contract?
Question 2 a. A bond that matures in one year has a $500 face value and a $60 coupon. What is the price of the bond if the interest rate is 6 percent and the bond was purchased by the present owner for $450? b. A bond that matures in two years has a face value equal to F and a coupon equal to R. Suppose that the yield to maturity, i, is such that i = ( R / F ). The price of the bond equals... F F/(1+i) F(1+i) F/i Answer both otherwise don't do that I will Dounvote
Question 7 You hold an annual coupon bond for 1 year, receiving the 0.14 coupon before selling. When bought it had 6 years to maturity, and the YTM was 0.095. Over the year, interest rates ROSE by 0.002What is the total holding period return for this investment? Group of answer choices 0.0939 0.0856 0.0903 0.0879 0.0820
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 6 You will receive $70 interest every six months from your investment in a corporate bond. The bond will mature in eightyears from now and has face value of $1,000. This means that if you hold the bond until its maturity, you will continue to receive $70 interest semiannually and $1,000 face value at the end of eight years. a. What is the present value of the bond in the absence of inflation if the market interest rate is 9%? • The present value of the bond in the absence of inflation is $ 1289 (Round to the nearest dollar.) b. What would happen to the value of the bond if the inflation rate over the next eight years is expected to be %5? If the inflation rate over the next eight years is expected to be 5%, the present value of the bond will be $ 1700 (Round to the nearest dollar.)
Question 12: In the following, you are given 5 bonds. Suppose coupons of all bonds are paid semiannually, the bond principal 100 is paid at the bond maturity b) Calculate the duration for each bond Years to Maturity 0.5 1 1.5 2 2.5 Bond price 98 99 99 98 97 Coupon per year Spot rate Duration ? 5. 4)

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