Stacy Picone is an aggressive bond trader who likes to speculate on interest rate swings. Market interest rates are currently at 10.5​%,but she expects them to fall to 8.5​% within a year. As a​ result, Stacy is thinking about buying either a​ 25-year, zero-coupon bond or a​ 20-year, 9.0​% bond.​ (Both bonds have​ $1,000 par values and carry the same agency​ rating.) Assuming that Stacy wants to maximize capital​ gains, which of the two issues should she​ select? What if she wants to maximize the total return​ (interest income and capital​ gains) from her​ investment? Why did one issue provide better capital gains than the​ other? Based on the duration of each​ bond, which one should be more price​ volatile?

Please Help me with this one I am having a lot of trouble trying to figure this out.

Mickey and Minnie just bought a zero coupon bond for $597.97, but they cannot recall when it matures.  The yield to maturity equals 5.2%.  Can you help Mickey and Minnie?  The bond's face value is $1000.  (Assume annual discounting)  (Enter your answer in years and round to 2 decimal places.)

You manage a bond portfolio worth $400 million. You wish to hedge your portfolio against rise in interest rates by using T-bond futures that will mature in 9 months. The duration of your bond portfolio is 6 years, the duration of the T-bond is 7 years. The bond futures price is 98,000, (a) What action must you take and how many contracts? (b) Why do you need to use the duration of the bonds to get the answer

Mary Blake is considering whether to buy stocks or bonds. She has a good understanding of the pros and cons of both. The stock she is looking at is trading at $71.25, with an annual dividend of $5.00. Meanwhile, the bond is trading at 94.00%, with an annual interest rate of 12%. Calculate for Mary her yield for the stock and the bond.

California Resource Corporation has a bond outstanding with a coupon interest rate of 6 percent that will mature in 7 years. The investors who have purchased the bonds are requiring a rate of return of 11.41 percent! Compute the value of the bonds for the current investors. Earning a 11.41 percent rate of return is fantastic-sure beats government Treasury bond rates. So why would many investors choose not to invest in these bonds unless they can receive a really high rate of return for bonds?

Lin has a B rated $30,000 bond with a coupon of 2.5% maturing in 2030 that is currently yielding 3.2%.  This year, the Fed is expected to lower interest rates by 50 basis points.  Explain the effect on the price, yield and cash flow of the bond. (indicate if it will increase or decrease)

An investor is considering purchasing a $1,000 bond with an 8% coupon rate. The bond was issued 7 years ago with a 30 year original maturity. If the investor requires a return of 7% based on the riskiness oft he bond, how much should she pay for the bond?

The Chief Financial Officer of a company would like to raise money for new equipment by floating a new bond issue.  The CFO would like to receive $1000 (full face value) for each of the bonds she sells.  After collecting the below bond market data, and if the bonds carry a rating of A and have a term of 10 years, what coupon rate should be included in the bond contract?   Assume an annual coupon payment.      Security& Rating          Maturity Face     Coupon     Price  Treasury    1 $    1,000    0.00% $     965.00  Treasury    3 $    1,000    1.90% $     939.06  Treasury    5 $    1,000    4.30% $     932.42  Treasury   10 $    1,000    6.80% $   1,007.12  Treasury   15 $    1,000    6.60% $     908.25  CorpA  A   5  $    1,000    8.10% $     990.00  CorpB  BB  10 $    1,000    7.90% $     859.88  CorpC  AA  15 $    1,000    7.00% $     660.00