Which of the following bond prices is most sensitive to market rate changes? The par value is $1,000 for all. Oa. 6 years, 4.5% coupon rate, 3% YTM O b. 10 years, 4.5% coupon rate, 2.99% YTM O c. 6 years, 5.5% coupon rate, 4% YTM O d. 10 years, 5.5% coupon rate, 3% YTM e. 10 years, zero coupon bond, 2.99% YTM

Which of the following bond prices is most sensitive to market rate changes? The par value is $1,000 for all. Oa. 6 years, 4.5% coupon rate, 3% YTM O b. 10 years, 4.5% coupon rate, 2.99% YTM O c. 6 years, 5.5% coupon rate, 4% YTM O d. 10 years, 5.5% coupon rate, 3% YTM e. 10 years, zero coupon bond, 2.99% YTM

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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Given the following information on a bond, Par value: $1000 Interest rate: 6% Coupon rate: 8% paid semiannually Years to maturity: 15 years, what is the expected price at the end of year 5? Question 7Select one: a. 1145.32 b. 1152.98 c. 1148.77 d. 1141.97 please show math and explanation..
Calculate the value of a R1,000 bond which has 10 years until maturity and pays quarterly interest at an annual coupon rate of 12 percent. The required return on similar-risk bonds is 20 percent. What is the correct answer A. R656.77 B. R835.45 C. R845.66 D. R2,201.08
A. Calculate the yield spread of the following floating rate bond: • Annual coupon rate = reference rate + 200 basis points• initial reference rate (annual) = 4%• The bond has a 10-year of term to maturity• Assume the bond’s par value = USD1000• The price of the bond = USD1,032.84 B. Suppose the new reference rate is decreased to 3% two years after the bond is issued. What is the price of the bond then?
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1. Bond prices and yields (S3.1) A 10-year bond is issued with a face value of $1,000, paying interest of $60 a year. If interest rates increase shortly after the bond is issued, what happens to the bond's a. Coupon rate? b. Price? c. Yield to maturity?
7. Given the two bonds below, answer the following questions. Bond Bond A Coupon Rate B 5% Par/Face/Princ $1000 Years to Maturity 2 5% $1000 a. If the Yield to maturity of the two bonds is 5%, what is the price of both bonds. b. Find the Modified Duration of both bonds. c. Find the Modified Convexity of both bonds. d. Estimate the price of bond B using the Tayor Series Expansion if interest rates rise to 6% for the Yield to Maturity. 3

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