Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Suppose a pure discount State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 3.5%, how much is the bond worth today?
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- You are considering a savings bond that will pay $100 in 8 years. If the interest rate is 2.2%, what should you pay today for the bond? The amount that you should pay today for the bond is $ (Round to the nearest cent.)arrow_forwardSuppose the government decides to issue a new savings bond that is guaranteed to double in value if you hold it for 18 years. Assume you purchase a bond that costs $100. a. What is the exact rate of return you would earn if you held the bond for 18 years until it doubled in value? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If you purchased the bond for $100 in 2020 at the then current interest rate of .22 percent year, how much would the bond be worth in 2028? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. In 2028, instead of cashing in the bond for its then current value, you decide to hold the bond until it doubles in face value in 2038. What annual rate of return will you earn over the last 10 years?arrow_forwardA 10 year bond pays interest of $28.20 semiannually, has a face value if $1000, and is selling for $810.01. What are its annual coupon rate and yield to maturity?arrow_forward
- You are thinking about buying a savings bond. The bond costs $51 today and will mature in 12 years with a value of $102. What annual interest rate will the bond earn? The bond will earn an annual rate of %. (Round to two decimal places.)arrow_forwardYou have purchased a treasury bill for $960. It’s par value is $1000, and it’s maturing in 120 days. What is the treasury bills bond equivalent yield?arrow_forwardSuppose the U.S. Treasury offers to sell you a bond for $2,000. No payments will be made until the bond matures 15 years from now, at which time it will be redeemed for $4,000. What interest rate would you earn if you bought this bond at the offer price?arrow_forward
- A US savings bond will pay you $1,000 in 3 years. If return is 2.85%, how much shoudl you pay for the bond today?arrow_forwardThe British government has a consul bond outstanding paying £100 per year forever. Assume the current interest rate is 4% per year. What is the value of the bond immediately after a payment is made? What is the value of the bond immediately before a payment is made?arrow_forward3 A $1000 face value, 8% bond (interest payable semiannually) has 20 years remaining until maturity (at which time it will be redeemed at face value). The rate of return required by the market on this type of bond is 8% compounded semiannually. What is the market value of this bond today?arrow_forward
- Suppose a treasury bond will pay $2,500 five years from now. If the going interest rate on 5-year treasury bonds is 5%, how much is the bond worth today? Round-off answer to 2 decimal values. *arrow_forward2. Suppose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 4.9%, how much is the bond worth today: a) with annual compounding b) with monthly compoundingarrow_forwardSuppose a state of California bond will pay $1,000 eight years from now. If the going interest rate on these 8-year bond is 6.4%, how much is the bond worth today?arrow_forward
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