You're given two investment options: Bond X: A regular 2-year bond with a coupon rate of 4% per year, payable semi-annually. Its current price is $975. Bond Y: A 2-year real-return bond with a coupon rate of 3% per year, payable annually. Its current price is $980. What is the average annual inflation rate over the next 2 years that would make the nominal rates of return of the two choices the same?   Use continuous compounding only

A bond has 10 years until maturity, a coupon rate of 8.1%, and sells for $1,190. Interest is paid annually. (Assume a face value of $1,000.) a. If the bond has a yield to maturity of 9.9% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. Price b. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Rate of return % c. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. Real rate of return %

A bond with 5 years to maturity, a face value of $2,000 and a coupon rate of 8.0% is selling for $1750. What is its yield to maturity? If the yield changes to 8.0%, what will be the new price of the bond? (Assume annual coupon payments.)

You invest in a 10-year Peloton bond that pays interest of 8.7% per year. If inflation is 6.1% per year, what is: The exact, real interest rate (Your answer should be a % carried to 3 places), and The approximate real interest rate? (Your answer should be a % carried to 1 place)

Suppose you are interested in buying a 1.5% semi-annual coupon treasury bond maturing in exactly 10 years. You think appropriate discount rate for this bond (aka yield to maturity or YTM) is 3%. How much should you pay for this bond if its par value is $1,000?

Suppose the interest rate on a 1-year government bond is 3.00%, on a 4-year government bond is 3.50% and that on a 6-year government bond is 4.90%. What is the market's forecast for 2-year rates 4 years from now, assuming the pure expectations theory is correct? Show your work.

Consider the following scenario: A bond has a price of $95 (Par Value 100). It matures in 7 years and pays coupons semi-annually. Find the coupon rate of the bond (in annual terms) that would yield a duration of 5.5.

The real risk-free rate is 3.5% and inflation is expected to be 2.25% for the next 2 years. A 2-year Treasury security yields 6.45%. What is the maturity risk premium for the 2-year security? Round your answer to one decimal place.   %

A bond has 10 years until maturity, a coupon rate of 8.3%, and sells for $1,170. Interest is paid annually. ( Assume a face value of $1,000.) If the bond has a yield to maturity of 9.7% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. Round your answer to nearest whole number. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.

Assume you can buy a bond that has a par value of $1000, matures in 10 years, yielding 6% and has a duration of 5. If you would like to use this bond to form a guaranteed investment contract “GIC” and offer a guaranteed rate of return to investors for certain years. a. what is the maximum yield you can offer? Why? Explain. b. For how many years would you make the guarantee? Explain.