6. Suppose that you invest in a 10-year, semi-annual coupon,$1,000 par value bond when it is first issued. The coupon rateand yield to maturity are equal both 8 percent. Immediatelyafter purchase, the annual yield to maturity for the bond falls to7 percent. First calculate then use duration to determine thepercentage gain (loss) on the sale of the bond.

If Stated rate of interest is more than market rate of interest than selling price of Bonds will be…

Answered: Suppose that you invest in a 10-year,…

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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A bond has 9 years until maturity with a coupon rate of 7% and anannual coupon payment of $50 and a future value of $1000. Calculate the Present Value. The same bond has a future value of $1,000 (keeping the same priorassumptions (9 years until maturity, 7% coupon rate), however,excluding the annual coupon payment). Calculate the Present Value.
Suppose you purchase a five-year, 12 percent coupon bond (paid annually) that is priced to yield 10 percent. The face value of the bond is $1,000. Calculate the maturity value of the bond.
A premium annual - pay bond pays a $77 coupon, has a yield to maturity of 5.77 %, and is priced at $ 1,153.43. How many years till the bond matures? Answer in years to at least two decimal places.
Assume that a company issues a new bond with coupon rate of 11 %, 5% yield and $100 par value bond. Coupon is paid annually. The bond has three years to maturity. (1) What is the Macaulay duration of this bond? (ii) How would you interpret the result obtained in part (e)(i) above?
find the value of a 15% coupon 3 year maturity bond, whose face value will be repaid at the end of the maturity.
Assume a bond that promises eight annual coupon payments of $70 and will repay its face value of $1000 at the end of the eight years. Assuming that you are offered the bond for a price of $1035.94, use detailed workings to compute the implied YTM
The current price of an annual coupon bond is 100. The yield to maturity is an annual effective rate of 8%. The derivative of the price of the bond with respect to the yield to maturity is -700. Using the bond's yield rate, calculate the Macaulay duration of the bond in years.
What is the Macaulay duration of a semi-annual bond with a coupon rate of 7 percent, five years to maturity, and a current price of $959? What is the modified duration? Duration is __. years. Modified duration is __ years.
Please assist with the following question with full handwritten working: What is the value of a 10 year, 8.2% coupon bond with semiannual coupons. Assume the par value of the bond is $100 and it is redeemable at par. The interest rate (nominal, converted semiannually) is 10.6%.
The bond's duration is the sum of the present value of each payment weighted by the time period in which the payment is received, with the resulting quantity divided by the price of the bond. Therefore, solve for the bond's duration given the following variables: A $1,000 par bond is priced at 95% of par, the bond's annual coupon rate is 6%, and the bond has 4 years to maturity. Additionally, show your calculator's function keys for the 5th column titled, "What is the Present Value Interest Factor at ? %" PV =, FV =, PMT =,N=, and I = .... and CPT key = ? 0.0000 CUIT CPT SET ENTER DEL INS Column 1 Column 2 Column 3 Column 4 Column 5 2ND CF NPV IRR PM AMORT DON CLR TVM PV PMT FV RAND Number (#) of "X" means "multiplied each by" payment Amount of payment "A $1,000 par bond is priced "X" means "multiplied by" What is the Present Value Interest 呢 VE 1/x HYP SIN مر at 95% of par" so $950 x .06 = $57?) 1 X $ 57 X Factor at ? % ? (show calculator function keys: PV=, FV = PMT =, N =, & I=? ? =…
You purchase a bond with an invoice price of $1,170. The bond has a coupon rate of 7.2 percent, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond? Assume a par value of $1,000.
The following table summarizes prices of various default-free zero-coupon bonds (expressed as a percentage of the face value): a. Compute the yield to maturity for each bond. b. Plot the zero-coupon yield curve (for the first five years). c. Is the yield curve upward sloping, downward sloping, or flat? a. Compute the yield to maturity for each bond. The yield on the 1-year bond is 3.92 %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) Price (per $100 face value) 1 $95.51 2 3 $91.10 $86.55 $81.69 $76.45 Print Donday

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