You bought a 5% coupon, $1000 face value five-year bond at par three years ago. What...

You bought a 5% coupon, $1000 face value five-year bond at par three years ago. What annual return did you expect to make when you made that investment? At the beginning of the second year, the bond's discount rate rose to 12%. You sold the bond today. What average annual return did you make on that bond over the three years that you held it? (Please show work and formulas used. Do not use a finance calculator.)

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Last year, you bought a bond with face value $1000, maturity 20 years, coupon rate of...

Last year, you bought a bond with face value $1000, maturity 20 years, coupon rate of 7% per year payable semi-annually and yield to maturity of 5.5% per year. Currently the bond sells for $900. How much would be your total yield if you sell this bond today? (17.84%) (15.79%) 13.71% 10.78%.

A $1000 par value bond with a term of 5 years and a coupon rate of...

A $1000 par value bond with a term of 5 years and a coupon rate of 6% convertible semi-annually is purcased to yield 8% convertible monthly. What is the purchase price of the bond?

A five-year $1000 face value bond has a 5% coupon rate and a 10% yield to...

A five-year $1000 face value bond has a 5% coupon rate and a 10% yield to maturity. It makes annual coupon payments selling for $810.46. Please calculate this bond’s (20 points) Macaulay duration Modified duration Convexity If the interest rate rises by 100 bps, what would be the dollar amount change in price?

What is the quote of a 5 year, zero coupon bond with $1000 face value if...

What is the quote of a 5 year, zero coupon bond with $1000 face value if the yield to maturity is 2.6% (semiannual compounding)? Round to 3 decimal places

Suppose that you bought a five year coupon bond with $20,000 face value, 7% coupon rate...

Suppose that you bought a five year coupon bond with $20,000 face value, 7% coupon rate and 7% yield to maturity. After holding it for a year and collecting the first coupon payment you decide to sell it. Calculate the return (in %) on this investment if the interest rate has increased to 9% while selling the bond.

A bond with three years to maturity has a face value of $1000 and a coupon...

A bond with three years to maturity has a face value of $1000 and a coupon rate of 3%. It is initially bought at a yield to maturity of 7% then sold after one year when market yields have fallen to 3%. What is the rate of return for the first year?

Values for a bond bought at par with face value $1000, with yield to maturity of...

Values for a bond bought at par with face value $1000, with yield to maturity of 5% initially, and 2% after 1 year. Values for a bond bought at par with face value $1000, with yield to maturity of 2% initially, and 5% after 1 year. Aug 28, 2018 10:49 AM Instructions The goal is to create a table for the rates or return on bonds of varying maturities like the one in the notes for Chapter 4. The bond...

A bond has a $1000 par value and issued 5 years ago. The bond has 10...

A bond has a $1000 par value and issued 5 years ago. The bond has 10 years to maturity and an annual 8% annual coupon and sells for $990. i) Estimate the bond's current yield ii) Estimate the bond's yield-to-maturity iii) Explain the relationship of the bond price and its yield (Please explain the answer in detail, thank you)

Suppose you bought a government bond with face value $1000 with coupon rate 10%. a) If...

Suppose you bought a government bond with face value $1000 with coupon rate 10%. a) If the bond matures in 2 years, what price should you pay for the bond today to earn a yield of 8%? b) If the bond matures in 10 years, what price should you pay for the bond today to earn a yield of 10%? c) For a bond that yields 15% return, what do you expect the price to be relative to the face...

A $1,000 par value bond was issued five years ago at a coupon rate of 8...

A $1,000 par value bond was issued five years ago at a coupon rate of 8 percent. It currently has 15 years remaining to maturity. Interest rates on similar debt obligations are now 10 percent. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Compute the current price of the bond using an assumption of semiannual payments. (Do not round intermediate calculations and round your answer...

Subjects