Suppose you have a bond with 5 years to maturity. The face value of the bond is $1,000 and its coupon rate is 6 percent (annual payments). When the required yield (YTM) on this boud is 5 percent (compounded annually), what is the current price of the bond? COLAE
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- J1. A bond has 12 years until maturity and a coupon rate of 8.2% payable semi-annually; and sells for $1,080. Face value of the bond is $1,000. What is the capital gain yield if you keep the bond for one year? You can assume the market rate is not changing.Q1. Consider the following par bond (ie coupon rate=yield): Year 3 5 7 10Yld 0.83% 1.22% 1.45% 1.54% Q1a. based on linear interpolation, what is the expected yield for a 10 year note ONE year later, assuming yield curve shape stays the same? Q1b. how much should the 10y note be priced 1 year later (as a 9 year note)?1. Suppose a 8-year bond has a face value of $1,000 and has a semi-annual YTM of 0.063. It pays semi-annual coupons of 8%. What is the bond’s price?
- 1.If you buy a 5-week T-bill with a face value of Tk.1,500 for $990, what is the bond equivalent yield, assuming it is not a leap year?A one-year zero coupon bond costs $99.43 today. Exactly one year from today, it will pay $100. What is the annual yield-to-maturity of the bond? (1.e., what is the discount rate one needs to use to get the price of the bond given the future cash flow of $100 in one year?) 1.0057 0.0057 2.0057 -0.0057Use the following information to answer the questions. Bond A Bond B Face Value 1000 1000 Coupon rate 10% 8% Coupons paid out Semi-annually Quarterly Years to maturity 4 4 Bond price 800 ? Suppose bond A and B have the same YTM. What is the yield to maturity of bond A? What is the price of bond B? What is the current yield of bond B? What is the EAR (effective annual rate) of these two bonds?
- 1. Bonds A S1000 bond has a coupon rate of 8 percent and coupons are payable annually. Suppose are 10 years left on the bond, and you purchased it at a yield of maturity of 9%. there a. How much are you paying for the bond? b. Are you buying at a premium or discount? Explain. c. What is the current yield of the bond? d. Suppose you expect to sell you bond next year to yield a rate of return of 5%, what is the expected selling price of the bond? e. What is the yield to maturity when you sell it?Example: Interest Rate Change Suppose we buy a 5-year bond and an annual coupon rate of 4%. The bond's face value is $1,000. If interest rate changes from 7% to 6%, the bond's price will...? What is the RoR of the bond?2. Consider a bond with a 7.5% annual coupon rate and a face value of $1,000. Calculate the bond price and duration & show your work. Years to Maturity Interest rate Bond Price Duration 4 6. 6. 9. What relationship do you observe between yield to maturity and the current market value? What is the relationship between YTM and duration?
- 3. Suppose the face value of a discount bond (i.e. zero coupon bonds) is 8000 and the bond matures in 12 years. a. What will be the price of the bond if the market interest rate is 8%? b. What will be the price of the bond if the market interest rate is 10%? c. Explain the relationship between bond price and interest rate using your answers you got for question a and question b.Assume that you wish to purchase a 30-year bond that has a maturity value of P1,000 and a coupon interest rate of 9.5%, paid semiannually. If you require a 6.75% rate of return on this investment, what is the maximum price that you should be willing to pay for this bond? O P675 O P1,450 O P1.352 O P1,111Q#7. Suppose a five-year bond with a 8% coupon rate and semiannual compounding is trading for a price of $922.58. Expressed as an APR with semiannual compounding, this bond's yield to maturity (YTM) is: Q#8 Consider a bond that pays annually an 5% coupon with 20 years to maturity. How much will the price of the bond change iff its yield to maturity increases from 4% to 7%?