An investor buys a 5-year bond with a coupon rate of 6.5% at a price that...

An investor buys a 5-year bond with a coupon rate of 6.5% at a price that reflects a yield to maturity of 10.9%. Interest is paid semiannually. Exactly one year later, after receiving the second coupon payment, the investor sells the bond for 97% of par value. What was the investor’s rate of return on the bond investment for the year? Enter your answer as a decimal out to four decimal places. As an example, you would enter 1.146% as 0.0146. If the return was negative, use a leading dash when entering your answer.

Solutions

Expert Solution

jeff jeffy answered 1 month ago

Next > < Previous

Related Solutions

1. An investor buys a 20-year semiannual bond with a coupon rate of 5% for $950....

1. An investor buys a 20-year semiannual bond with a coupon rate of 5% for $950. He plans to hold the bond for 8 years and then sell it. The investor expects to reinvest the first 6 coupon payments at 4.5% and the next 10 payments at 5.5%. He also expects that the bond’s YTM at the end of the holding period to be 6%. Under these assumptions, the total interest amount is A. $420.63 B. $450.85 C. $474.51 D....

An investor buys a bond with a $100 par value and a 5% coupon rate for...

An investor buys a bond with a $100 par value and a 5% coupon rate for $97. The bond pays interest semiannually. Exactly one year later, just after receiving the second coupon payment, the investor sells the bond for $96. What was the investor’s rate of return over the year from owning the bond? How do you get the answer using a financial calculator?

An investor buys a 5% annual coupon, 5 year bond for $1100. If the YTM is expected...

An investor buys a 5% annual coupon, 5 year bond for $1100. If the YTM is expected to remain constant over the next year, what return should the investor earn from the change in price of the bond? Group of answer choices

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?

An investor considers the purchase of a 2-year bond with a 5% coupon rate, with interest...

An investor considers the purchase of a 2-year bond with a 5% coupon rate, with interest paid annually and par of 100. The spot rates observed in the market today are as follows: 1-yr spot is 3%, the 2-yr spot is 4% and the 3-yr spot is 5%. The clean price of the bond is closest to: a. 101.93. b. 102.85. c. 105.81. d. 102.36. e. 103.10.

A bond has a coupon rate of 6.5 percent and 5 years to maturity. It has...

A bond has a coupon rate of 6.5 percent and 5 years to maturity. It has a yield to maturity of 8 percent and is selling in the market for $940.11. This bond has a face value of $1000. What is the duration of this bond? Suppose the Augustina National Bank has assets with a duration of 6 years and liabilities with a duration of 3.0 years. This bank has $200 million in assets and $180 million in liabilities. What...

What is the price of a 5 year bond with a 8% annual coupon rate and...

What is the price of a 5 year bond with a 8% annual coupon rate and face value of $1,000? The prevailing market annual interest rate is 2%. Coupons are to be paid annually.

Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 6.5%...

Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 6.5% when the market interest rate is 6.5%. One year later, the market interest rate falls to 4.5%. The rate of return earned on the bond during the year was %. (Round your response to two decimal places.)

1. Calculate the price of a 30-year annual coupon-ed bond with a coupon rate of 5%,...

1. Calculate the price of a 30-year annual coupon-ed bond with a coupon rate of 5%, a market rate of 7%, and a face value of $1000. n i PV PMT FV fill in data … … fill in data … fill in data … fill in data put answer here 2019 Spring2 2. Calculate the price of a 30-year semiannual coupon-ed bond with a coupon rate of 5%, a market rate of 7%, and a face value of $1000....

Find the price of 10-year 5% coupon bond if the price of 10-year 7% coupon bond...

Find the price of 10-year 5% coupon bond if the price of 10-year 7% coupon bond is $107 and 10-year interest rate is 6.5%. All bonds have $100 face value and pay semi-annual coupons.

Subjects