Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- You bought a 10-year US bullet bond for $990 with a coupon rate of 4.3%/year. A) Is the market rate > or < than 4.3%? B) Is the market rate a lot or a little > or < 4.3%?
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- What price would you pay for a 10-year, AA bond with a Face Value of $1,000 and a coupon rate of 7.10%?arrow_forwardYou just bought a bond (M=$1000, CR=10%, n=20 years, semiannual coupon pay yielding 10.5%. If you sell the bond one year from today when the yield is 9.75%, what would be your realized (actual) rate of return (before-tax)? 16.996%arrow_forward4. You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. What is the rate of return on your investment if the bond pays interest annually? If your marginal tax rate is 30%, and 50% of capital gains are taxable, what is the after-tax rate of return on your bond investment?arrow_forward
- What is a bond’s current yield if it’s ytm is 10% and it’s current price is 900. It pays coupons of 6% and has 6 years to maturity. Face value is 1000. What is current yield? Current Price is given as 900. What if it was not given?arrow_forwardA $1,000 par value bond was just issued with a 30 year maturity and a 6% coupon rate. If an investor has a required return of 8%, how much should they pay for this bond? needs to include two decimal placesarrow_forwardYou buy a bond today that has a coupon rate of 6.5%, with 10 years to maturity, and is trading at a YTM of 5.6% Assume that one year later, the bond is trading at a YTM of 5.0% What was the annual percentage return you earned by owning the bond? TIP: The annual return on a bond is equal to (Price(1) - P(0) + Coupon Payments)/P(0) See textbook, Section 6.4 Bond Rates of Return. Remember that when you calculate the value of the bond in one year, you will have received two coupons. Also, when you use the above formula, the prices of the bonds P(0) and P(1), as well as the coupons, should be calculated as dollars, not percentages of par value.arrow_forward
- Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 5.2% when the market interest rate is 5.2%. You sell the bond one year later after the market interest rate falls to 3.2%. The rate of return earned on the bond during the year was%. (Round your response to two decimal places.)arrow_forwardFixed Income Securities4. Today is t = 0. You have just bought a five-year zero-coupon Treasurybond with $100 face value. You paid $80.(a) What is the annually compounded yield to maturity on the bond?(b) Suppose that yields at all maturities decrease to 2% immediately after you havepurchased the bond. Calculate the annualized holding period return if you sellthe bond one year after you have purchased it, at t = 1.(c) What is the annually compounded yield to maturity on the bond at t = 1?arrow_forward
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