You have entered into a forward contract with the following parameters:Bond:5 year, zero coupon bondIssuance:Face Value:1 year spot rate:10 year spot rate:Group of answer choicesForward price = $704.96Forward price = $726.11Forward price = $769.68Will be issued in 1 year$10003 pct.6 pct.

Approach to solving the question: Detailed explanation: Examples: Key references: General Finance

Answered: You have entered into a forward…

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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Small Ltd acquired a portfolio of corporate bonds on 1 July 2019. The bonds will generate contractual cash flows that are solely principal and interest. Small Ltd intends to collect contractual cash flows and also sell the bonds within the next few years. The face value of these bonds: $8,000,000 Coupon paid in arrears annually at the rate of: 7% The bonds will mature in (years): 10 The effective interest rate of the bonds: 9% On 30 June 2020, the fair value of the corporate bonds was $8,000,000 Which of the following is/are true on 30 June 2020 (rounded to the nearest thousand dollars)? Select one or more: O a. The bonds are classified as fair value to OCI O b. A gain needs to be recognised in other comprehensive income for $959,000 O c. The effective interest rate becomes 7%, same as the coupon rate O d. A gain needs to be recognised in profit and loss for $959,000 O e. The fair value of the bonds based on amortised cost at 9% initial rate was $7,041,000 O f. A gain needs to be…
A coupon bond has the following characteristics: Purchase Price= 9800$ Annual Bond Rate= 7% Maturity= 2 years Face Value= 10000$ Period of Payment= Semi-annual What will the final earnings related to the acquisition of this coupon bond? DA 300$ B. 1600$ DC. 11200$ OD. 14000$
A GH¢5000 callable bond pays interest at j2 9% and matures at par in 20 years. It may be called at the end of years 10 to 15 (inclusive) for GH¢5200. Find the price to yield at least j2 = 8,% until the redemption.
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Given n1-year par rate = 4% n2-year par rate = 5.2% n3-year par rate = 6.4% nSuppose the bond price is K1, 1 - Compute the 1-year, 2-year and 3-year spot rates using bootstrapping process. 2 - Compute the 1-year forward rates, starting from today, 1 year from now and 2-year from now
Q2. Calculate the forward price one year from now for a $1 par, zero-coupon, two-year bond give the following spot rates: the one-year spot rate is 7% and the three-year spot rate is 9%.
Prepare a duration table for a coupon bond using the following assumptions: a. $100,000 par value b. 7% coupon rate c. 10-year maturity d. Annual interest payments e. Discount rate of 12%
A bond with $40 coupons every 6 months is purchased at a discount to yield j2= 8%. If the absolute value of the write-up for the first year is S10, what is the purchase price of the bond? A. $1250 B. S1500 C. $2500 O D. S750 Reset Selection
round to nearest cent
What is the answer ?
you You are considering a 15-year $1,000 un par value bund. Its coupon rate is 10% and interest is paid semiannually. If require on "effective" armual interest rate (not a nominal rate) of 9.2025%, how much should you be willing to for pay the bond? 97 clic ve! 62.211711 $801 200 Mon Noo Z 4
The one-year spot rate z1 = 5% and the forward price for a one-year zero-coupon bond beginning in one year is 0.9346. Find the spot price (zero price) of a two-year zero-coupon bond.

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