The current price of a 1000 face value 1 year zero coupon bond is 925. What is the implied interest rate? (Your answer shojkd be in Derventage terms two decimal places, for example, 1.23%)
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The current price of a 1000 face value 1 year zero coupon bond is 925. What is the implied interest rate? (Your answer shojkd be in Derventage terms two decimal places, for example, 1.23%)
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- Consider the market rates for the maturities 1, 2, and 3 years respectively in the table below. What is the price of a 3-year bond with annual payments, coupon rate equal to 9.50% and face value equal to $68,000. Answer with two decimal digits accuracy. Example: 74929.05 t 1 2 3 R(0,t) 1.95 2.90 4.40 Blank Excel Worksheet Your Answer: AnswerIf the YTM on a bond is 11.1 %, what will be the periodic rate assuming the bond is paying coupons semi-annually? (Write this number as a decimal and not as a percentage, e.g. 0.11 not 11%. Round your answer to three decimal places. For example 1.23450 or 1.23463 will be rounded to 1.235 while 1.23448 will be rounded to 1,234).Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 8%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
- What is the present value of a $1000 future amount received in 17 years if the appropriate discount rate is 11.7% APR? (FYI: This problem computes the value of a 17 year, $1000 zero coupon bond, although it is phrased in time value of money language, rather than bond language.) Answer to 2 decimal points.Suppose the interest rate on a 1-year T-bond is 6.3 % and that on a 3 year T-bond is 7.3 %. Assuming the pure expectations theory is correct, what is the market's forecast for 2-year rates 1 year from now? Enter your answer as a percentage and do not use the % symbol.(b)You purchase the $110 bond today and sell it off next year at $108. What is its one-year rate of return (assume the bond’s coupon rate is 5% and its face value is $100)? If the expected inflation over the course of the year is 2%, what would the ex-ante real rate of return be for the bond on part (b)?
- Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % % Real return Nominal return b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 1%Suppose that you buy a two-year 8.9% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 3.9% in the first year and 5.9% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)Consider two zero coupon bonds. Both have face values of $100. Bond A pays its face value in 8 years, and Bond B pays its face in 2 years. If interest rates change from 9% to 8%, what is the percentage change in the long maturity bond's price minus the percentage change in the short maturity bond's price? Express your answer in percentage form rounded to one decimal place.
- Suppose at time t = 0 we observe the following forward rates F(0,0, 1/4) F(0, 1/4, 1/2) F(0, 1/2, 3/4) F(0,3/4,1) 6% 7% 5% 8% Answer the following two questions: a) What is the price of a zero-coupon bond with principal 100 and maturity in 1 year? Round your answer to 2 decimal placesSuppose a zero coupon bond with a $100 face value due in 3 years from today is trading today for $83. How much is the YTM (yield to maturity) of this Zero-coupon bond?Enter your answer in the following format: 0.1234Hint: Answer is between 0.0577 and 0.0692Let's denote the price of a nonmaturing bond (called a consol) as P. The equation that indicates this price is Pn =-, where I is the annual net income the bond generates and r is the nominal market interest rate. a. Suppose that a bond promises the holder $200 per year forever. The nominal market interest rate is 6 percent. Calculate the bond's current price: S. (Round your answer to the nearest whole dollar.)
