Suppose that the yield curve shows that the one-year bond yield
is 6 percent, the two-year yield is 5 percent, and the three-year
yield is 5 percent. Assume that the risk premium on the one-year
bond is zero, the risk premium on the two-year bond is 1 percent,
and the risk premium on the three-year bond is 2 percent.
a. What are the expected one-year interest rates next year and
the following year?
The expected one-year interest rate next year...
If 10-year T-bonds have a yield of 6 %, and the 10-year
corporate bonds of Raytheonion Inc. yield 9 %, the maturity risk
premium on all 10-year bonds is 1.52%, and corporate bonds have a
0.48 % liquidity premium versus a zero liquidity premium for
T-bonds, what is the default risk premium on the corporate
bond?
7. Apple issued bond with a coupon rate of 5.67% and pays coupons annually. The bond matures in 21 years and the yield to maturity on similar bonds is 4.25%. What is the price of the bond? 8. A bon dthat sells at par pays a semi-annual coupon of 91.17 and has 18 years to maturity. What is the bond's yield to maturity? Answer as a percent.9. Investors with very high tax rates should always prefer corporate bonds due to taxation....
5) a) Consider a 20-year 6 percent coupon bond.
i) What is the price of this bond if the market yield is 8%?
ii) What is the percentage change in the price of this bond if
the market yield rises to 9%?
b) Consider a 20-year 7 percent coupon bond.
iii) What is the price of this bond if the market yield is
8%?
iv) What is the percentage change in the price of this bond if
the market yield...
A bond currently has a price of $1,050. The yield on the bond is
6%. If the yield increases 30 basis points, the price of the bond
will go down to $1,025. The duration of this bond is ____
years.\
Suppose 10-year T-bonds have a yield of 5.30% and 10-year
corporate bonds yield 6.65%. Also, corporate bonds have a 0.25%
liquidity premium versus a zero liquidity premium for T-bonds, and
the maturity risk premium on both Treasury and corporate 10-year
bonds is 1.15%. What is the default risk premium on corporate
bonds?
Group of answer choices
1.22%
1.34%
1.10%
0.86%
1.20%
(a) Suppose you purchase a 20-year, zero-coupon bond with a
yield to maturity of 10%. For a face value of $800, the bond will
initially trade for
(b) If the bond’s yield to maturity change to be 12%, what will
its price be five years later?
(c) If you purchased the bond at $118.91 and sold it 5 years
later, what would the rate of return of your investment be?
A company issues $17,200,000, 5.8%, 20-year bonds to yield 6% on
January 1, Year 7. Interest is paid on June 30 and December 31. The
proceeds from the bonds are $16,802,426. Using straight-line
amortization, what is the interest expense in Year 8 and what is
the carrying value of the bonds on December 31, Year 9?
Record journal entries as well