Stanley Hart invested in a state government bond that promised an annual yield of 6.7 percent....

Stanley Hart invested in a state government bond that promised an annual yield of 6.7 percent. The bond pays coupons twice a year. What is the effective annual yield on this investment?

	a.	6.81%
	b.	3.35%
	c.	9.4%
	d.	8.5%.
	e.	6.70%

Expert Solution

Effective Annual Rate = (1 + r/2)² - 1

Effective Annual Rate = (1 + 0.067/2)² - 1

Effective Annual Rate = 6.81%

jeff jeffy answered 2 years ago

The yield to maturity of a $1,000 bond with a 6.7% coupon rate, semiannual coupons, and...

The yield to maturity of a $1,000 bond with a 6.7% coupon rate, semiannual coupons, and two years to maturity is 8.2% APR, compounded semiannually. What is its price?

A government bond currently carries a yield to maturity of 8 percent and market price of...

A government bond currently carries a yield to maturity of 8 percent and market price of $1,080. If the bond promises to pay $100 in interest annually for five years, what is its current duration?

A $1,000 par value bond, has an annual coupon rate of 6 percent, an annual yield...

A $1,000 par value bond, has an annual coupon rate of 6 percent, an annual yield to maturity of 7.5 percent, and 10 years until maturity. Assuming semi-annual coupon payments: d. If the bond were selling for $929, what would the effective yield-to-maturity if you reinvest coupon payments at 9 percent? ***please show the work or what is entered in calculator***

A 10-year bond has a 10 percent annual coupon and a yield to maturity of...

A 10-year bond has a 10 percent annual coupon and a yield to maturity of 12 percent. The bond can be called in 5 years at a call price of $1,050 and the bond’s face value is $1,000. Which of the following statements is most correct? Please explain why. a. The bond’s current yield is greater than 10 percent. b. The bond’s yield to call is less than 12 percent. c. The bond is selling at...

An investor has $1,000,000 invested in US government bond with an average annual return of 3%....

An investor has $1,000,000 invested in US government bond with an average annual return of 3%. The investor decides to invest 60% of her money on a tech stock that has an average annual return of 8%. The variance of the tech stock is estimated to be .002025. a. What is the variance of the portfolio created by combining government bond and the tech stock? [ ] b. What is the expected return to investor’s portfolio? [ ] c. Find...

A bond has a face value of $1,000, an annual coupon rate of 5 percent, yield...

A bond has a face value of $1,000, an annual coupon rate of 5 percent, yield to maturity of 10 percent, and 10 years to maturity Calculate the bond's duration.

Landover ridge offers a 10 percent annual coupon bond with semiannual payments. The yield to maturity...

Landover ridge offers a 10 percent annual coupon bond with semiannual payments. The yield to maturity is 8 percent and the bonds mature in 8 years. What is the price per bond if the face value is $1000?

Galvatron Metals has a bond outstanding with a coupon rate of 6.7 percent and semiannual payments....

Galvatron Metals has a bond outstanding with a coupon rate of 6.7 percent and semiannual payments. The bond currently sells for $1,891 and matures in 17 years. The par value is $2,000 and the company's tax rate is 35 percent. What is the company's aftertax cost of debt? 3.39% 3.63% 4.72% 5.00% 4.36%

Find the promised yield to maturity for a 9% coupon, $1,000 par 20 year bond selling...

Find the promised yield to maturity for a 9% coupon, $1,000 par 20 year bond selling at $920.56. The bond makes semiannual coupon payments. a)9.44% b)9.92% c)9.99% d)10.14% Yield to Call Find the yield to call for a 8% coupon, $1,000 par 15 year bond selling at $1045.50 if the bond is callable in 10 years at a call price of $1,080. The bond makes semiannual coupon payments. a) 6.88% b) 7.13% c)6.73% d)7.87%

Consider a 4-year bond with 12 percent semi-annual coupon payments and currently priced to yield 10...

Consider a 4-year bond with 12 percent semi-annual coupon payments and currently priced to yield 10 per cent per annum. Calculate duration of the bond.

Question