Question
In: Finance
An investor purchases a bond that does not pay a coupon (zero-coupon) with a face value...
An investor purchases a bond that does not pay a coupon (zero-coupon) with a face value of $5,000. Assume the bond’s 8.4% yield to maturity is expected to remain constant over the duration of the bond’s life. What is the rate of return on his investment, if he sells this bond ten years later?
4.20%
5.04%
8.40%
Not enough information to answer the question
6.72%
Solutions
Expert Solution
He receives a rate of return equals to the yield to maturity. Here it is 8.4%
Option C is correct
jeff jeffy answered 2 years agoRelated Solutions
An investor purchases a bond that does not pay a coupon (zero-coupon) with a face value...
An investor purchases a bond that does not pay a coupon
(zero-coupon) with a face value of $5,000. Assume the bond’s 8.4%
yield to maturity is expected to remain constant over the duration
of the bond’s life. What is the rate of return on his investment,
if he sells this bond ten years later?
Group of answer choices
Not enouh information to answer the question
4.20%
6.72%
5.04%
8.40%
An investor wants to buy a zero-coupon bond with face value $100, maturity date is 12...
An investor wants to buy a zero-coupon bond with face value
$100, maturity date is 12 months (1 Year), market price is $50 and
the annual inflation rate is 5%.
What is the nominal zero-coupon bonds yield to maturity? What is
the real bond price?
an investor buys a bond having a face value of $1,000 and a coupon rate of...
an investor buys a bond having a face value of $1,000 and a
coupon rate of 6% payable semiannually. the market rate is now 3%
and the bond natures in 15 Years. How much did the investor
pay?
A zero coupon bond with a face value of $1,000 is issued with a initial price...
A zero coupon bond with a face value of $1,000 is issued with a
initial price of $333.33. The bond matures in 23 years. What is the
3-year implicit interest, in dollars, from the 7th to the 10th year
of the bond’s life? The bond’s yield is semiannually
compounded.
A zero coupon bond with a face value of $1,000 is issued with an initial price...
A zero coupon bond with a face value of $1,000 is issued with an
initial price of $497.96. The bond matures in 16 years. What is the
implicit interest earned, in dollars, for the first year of the
bond's life?
Multiple Choice:
$12.98
$22.18
$11.60 X
$11.09
$6.49
ABC bond is a risk-free, zero-coupon bond. It has a face value of $5000 and will...
ABC bond is a risk-free, zero-coupon bond. It has a face value
of $5000 and will mature in 15 years. Currently, the bond is
trading at the market price of $3750. What is the yield to maturity
of this bond?
Select one:
75.000%
62.500%
1.936%
0.968%
Portfolio A consists of a 2-year zero-coupon bond with a face value of $8,000 and a...
Portfolio A consists of a 2-year zero-coupon bond with a face
value of $8,000 and a 10-year zero-coupon bond with a face value of
$2,000. The current yield on all bonds is 11.75% per annum. (Answer
with two decimal digits accuracy)
The duration of portfolio A is
A zero coupon bond with a face value of $1,000 that matures in 8 years sells...
A zero coupon bond with a face value of $1,000 that matures in 8
years sells today for $556. What is the yield to maturity? (Use
annual compounding.)
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
Consider a zero-coupon bond maturing in 2 years with a face value of $1,000 and a...
Consider a zero-coupon bond maturing in
2 years with a face value of $1,000 and a yield to maturity of 2%.
Assume the recovery rate is 40%, and that default can only happen
exactly at the end of the 2-year period. There is a credit default
swap (CDS) available for this bond, and the premium is 0.8%.
For both a bondholder and a CDS buyer (with notional value
$1,000), compute the cash flows two years from today in the case...
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