The Johnson National Bank has purchased a bond that has a coupon rate of 6.5% (annual payments) and a face value of 5 to maturity and is selling in the market for $950.32. The bond makes annual coupon payments. What is the duration of this is to calculate the YTM of the bond. Hint: Use the duration derivation formula from the text as shown on page 237 of Chapter 7. Don't try reverse engineering taking the YTM and then using AP-DIA/(1+0)JP in order to solve for "D"; while this second approach might seem appealim slightly different answer. OA None of the other responses are correct. 08.3.74 years Oc3.38 years 00.3.68 years OE3.64 years

The Johnson National Bank has purchased a bond that has a coupon rate of 6.5% (annual payments) and a face value of 5 to maturity and is selling in the market for $950.32. The bond makes annual coupon payments. What is the duration of this is to calculate the YTM of the bond. Hint: Use the duration derivation formula from the text as shown on page 237 of Chapter 7. Don't try reverse engineering taking the YTM and then using AP-DIA/(1+0)JP in order to solve for "D"; while this second approach might seem appealim slightly different answer. OA None of the other responses are correct. 08.3.74 years Oc3.38 years 00.3.68 years OE3.64 years

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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You purchase a bond with a $100, 000 face value. a. The bond has a semi annual coupon of $3,880 and a maturity of 8 years. Calculate the annual coupon rate b. Assume the yield to maturity is 5.800%. Calculate the present value of the face amount (as if it was a STRIPS). c. Calculate the price of the bond. d. calculate the present value of the coupon payments. e. Calculate the current yield

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