Rank the following bonds in order of descending duration: BOND COUPON RATE (%) TIME TO MATURITY (YRS) YTM (%) A 15 20 10 B 15 15 10 C 0 20 10 D 8 20 10 E 15 17 10
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Rank the following bonds in order of descending duration:
|
BOND |
COUPON RATE (%) |
TIME TO MATURITY (YRS) |
YTM (%) |
|
A |
15 |
20 |
10 |
|
B |
15 |
15 |
10 |
|
C |
0 |
20 |
10 |
|
D |
8 |
20 |
10 |
|
E |
15 |
17 |
10 |
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- What is assumed the be the face value aka par value aka principal aka loan amount of a bond? It's also assumed to be a bond's FV. 10% $0 $100 $1,000The following information about bonds A, B, C, and D are given. Assume that bond prices admit noarbitrage opportunities. What is the convexity of Bond D?Cash Flow at the end ofBond Price Year 1 Year 2 Year 3A 91 100 0 0B 86 0 100 0C 78 0 0 100D ? 5 5 105( Fixed Income Securities) 18) F) Define the curvature of the term structure with respect to short-term, medium-term and long-term bonds and hence calculate the curvatures of the term structure at time t and time t+1 using the table below Term structure of interest rates Maturity Time t Time t+1 Short-term 3% 2% Medium-term 4% 5% Long-term 5% 4%
- Given the information below, which bond(s) will be issued at a discount? Stated Rate of Return Market Rate of Return. Bond 1. O Bond 2. Bond 4. O Bonds 1 and 2. Bond 1 5% 7% Bond 2 7% 8% Bond 3 12% 12% Bond 4 10% 9%Examine the following bonds A) Corporate Bond - maturity 15.08.2025 - fixed coupon rate - semiannual payment - rating BB B) Reverse convertible bond- maturity 15.08.2025 - fixed coupon rate- semiannual payment- rating BB C) Equity linked bond - maturity 15.08.2025- fixed coupon rate - semiannual payment - rating B D) Convertible Bond maturity 15.08.2025 fixed coupon rate - semiannual payment - rating BB Which bond has the highest price, at the issue? Why? Explain also the difference between bond C and D regarding the priceAssume all bonds have par or face value of 1,000
- Assume all bonds have a face value or par value of 1,000Describe a way to estimate the inflation premium(IP) for a t-year bond.Assume a face value of a bond JD 1000, when the bond reaches maturity, if it is selling at:a. JD 900, bond value goes down to JD 850b. JD 1000, bond value goes down to JD 900c. JD 1100, bond value goes up to JD 1200 d. JD 1050, bond value goes down to JD 1000
- Which of the following securities has the lowest interest rate risk? 5% bond, 20-year maturity 5% bond, 10-year maturity 6% bond, 10-year maturity 6% bond, 20-year maturity1. Identify whether each of the following bonds is trading at a discount, at par value, or at a premium. Calculate the prices of the bonds per 100 in par value. Coupon Payment per Period Number of Periods to Maturity Market Discount Rate per Period Bond A 2 6 3% 4% 5 5% 10 U S 5 0Comment on the attractiveness of the bonds in two ways: a) How does the yield compare to the benchmark? Market YTM: 3.62% YTM of bond: 3.72% b) How does the current price compare to the benchmark-yield implied price? Price: 100.875 Implied price: 100.923