The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 1 5.03% What is the price per $100 face value of a two-year, zero-coupon, risk-free bond? 2 5.48% The price per $100 face value of the two-year, zero-coupon, risk-free bond is $ 3 5.79% (Round to the nearest cent.) 4 5.93% 5 6.04%

The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 1 5.03% What is the price per $100 face value of a two-year, zero-coupon, risk-free bond? 2 5.48% The price per $100 face value of the two-year, zero-coupon, risk-free bond is $ 3 5.79% (Round to the nearest cent.) 4 5.93% 5 6.04%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 14P: Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has...

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Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may be called in 4 years at a call price of 1,060. The bond sells for 1,100. (Assume that the bond has just been issued.) a. What is the bonds yield to maturity? b. What is the bonds current yield? c. What is the bonds capital gain or loss yield? d. What is the bonds yield to call?
Yield to Maturity and Yield to Call Arnot International’s bonds have a current market price of $1,200. The bonds have an 11% annual coupon payment, a $1,000 face value, and 10 years left until maturity. The bonds may be called in 5 years at 109% of face value (call price = $1,090). What is the yield to maturity? What is the yield to call if they are called in 5 years? Which yield might investors expect to earn on these bonds, and why? The bond’s indenture indicates that the call provision gives the firm the right to call them at the end of each year beginning in Year 5. In Year 5, they may be called at 109% of face value, but in each of the next 4 years the call percentage will decline by 1 percentage point. Thus, in Year 6 they may be called at 108% of face value, in Year 7 they may be called at 107% of face value, and so on. If the yield curve is horizontal and interest rates remain at their current level, when is the latest that investors might expect the firm to call the bonds?
Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has a face value of $1,000 and a yield to maturity of 10.5883%. The bond pays coupons semiannually. What is the bond’s current yield?
Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?
The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 YTM 5.01% 5.48% 5.75% 5.97% 6.02% What is the price per $100 face value of a two-year, zero-coupon, risk-free bond?
The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 YTM 5.04% 5.48% 5.73% 5.94% 6.06% What is the price per $100 face value of a four-year, zero-coupon, risk-free bond?
Suppose the current zero-coupon yield curve for risk-free bonds is as follows:Maturity (years) 1 2 3 4 5YTM 4.14% 4.55% 4.78% 4.99% 5.37% What is the price per $100 face value of a three-year, zero-coupon, risk-free bond? What is the price per $100 face value of a four-year, zero-coupon, risk-free bond? What is the risk-free interest rate for a four-year maturity?
Suppose the current, zero-coupon, yield curve for risk-free bonds is as follows: Maturity (years) Yield to Maturity 1 4.33% 2 4.64% 3 4.92% 4 5.09% 5 5.30% a. What is the price per $100 face value of a 3-year, zero-coupon risk-free bond? b. What the price per $100 face value of a 4-year, zero-coupon, risk-free bond? c. What is the risk-free interest rate for a 1-year maturity? Note: Assume annual compounding. a. What is the price per $100 face value of a 3-year, zero-coupon risk-free bond? The price is $ (Round to the nearest cent.) b. What is the price per $100 face value of a 4-year, zero-coupon, risk-free bond? The price is $ (Round to the nearest cent.) c. What is the risk-free interest rate for a 1-year maturity? The risk-free rate is %. (Round to two decimal places.)
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The current zero-coupon yield curve for risk-free bonds is as follows: . What is the price per $100 face value of a four-year, zero-coupon, risk-free bond? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) YTM 1 2 3 4 5 4.98% 5.49% 5.73% 5.96% 6.09% Print Done The price per $100 face value of the four-year, zero-coupon, risk-free bond is $ (Round to the nearest cent.)
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Suppose the current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) Zero-Coupon YTM 1 3 4 3.25% 3.50% 3.90% 4.25% 4.40% Consider a five-year, default-free bond with an annual coupon rate of 5% and a face value of $1000. What is the YTM of this bond ?