Exactly two years ago an investor purchased a Portuguese government bond with a face value of...

Exactly two years ago an investor purchased a Portuguese government bond with a face value of EUR 10,000, an annually paid coupon of 5%, a remaining maturity of 10 years, and a YTM of 12%. Today, i.e., two years later, the bond has a YTM of 4%. What is the capital gain in EUR for this investor who bought the bond two years ago and sold it today (rounded to the nearest EUR)?

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

As nothing was mentioned excel is used.

jeff jeffy answered 2 weeks ago

Next > < Previous

Related Solutions

Exactly two years ago an investor purchased a Portuguese government bond with a face value of...

A government bond with a face value of $1,000 was issued eight years ago and there...

A government bond with a face value of $1,000 was issued eight years ago and there are seven years remaining until maturity. The bond pays annual coupon payments of $90, the coupon rate is 9% pa and rates in the marketplace are 9.5% p.a. What is the value of the bond today? a. $975.25 b. $1,427.50 c. $1,000.00 d. $972.83 e. $962.14

A. Two years ago, you purchased a new10-year bond issued by APPLE with a face value...

A. Two years ago, you purchased a new10-year bond issued by APPLE with a face value of $1,000 and coupon interest rate of 3%. Given the current crisis, bonds of equal risk and maturity are now 2%, so you decide to sell the bond. Calculate the selling price (4 points). Calculate the Annualized HPR from your investment (2).

An investor purchased a bond at its face value of $2500. The bond stipulates a fixed...

An investor purchased a bond at its face value of $2500. The bond stipulates a fixed nominal interest rate of 8% per year, paid quarterly, over its 5 year life. The investor is thinking about selling the bond after four years for $2200. A) Draw out the cash flow diagram illustrating this situation (either manually or using Excel). B) Determine the quarterly IRR, the nominal rate of return, and the effective rate of return if the bond is sold after...

An investor purchased a bond at its face value of $2500. The bond stipulates a fixed...

An investor purchased a bond at its face value of $2500. The bond stipulates a fixed nominal interest rate of 8% per year, paid quarterly, over its 5 year life. The investor is thinking about selling the bond after four years for $2200. a.Draw out the cash flow diagram illustrating this situation (either manually or using Excel). b.Determine the quarterly IRR, the nominal rate of return, and the effective rate of return if the bond is sold after four years....

Question 3: A bond with a face value of $1000 and maturity of exactly 5 years...

Question 3: A bond with a face value of $1000 and maturity of exactly 5 years pays 10% annual coupon. This bond is currently selling at an annual yield-to-maturity (YTM) of 11.5%. Answer the following questions for this bond. Calculate the current price of the bond. (5 points) Calculate modified duration of the bond using the timeline method. (10 points) Using just the modified duration, what is the new price of the bond when YTM is 12%? (5 points) solve...

A bond with a face value of $1000 and maturity of exactly 20 years pays 10%...

A bond with a face value of $1000 and maturity of exactly 20 years pays 10% annual coupon. This bond is currently selling at an annual yield-to-maturity (YTM) of 12%. Answer the following questions for this bond. a. Calculate the current price of the bond by discounting all the cash flows of the bond using the timeline method. b. Calculate the modified duration of the bond without using any Excel built-in function. (calculate PV of each cash flow, find the...

A corporate bond with a face value of $100,000 was issued six years ago and there...

A corporate bond with a face value of $100,000 was issued six years ago and there are four years remaining until maturity. The bond pays semi-annual coupon payments of $4500, the coupon rate is 9% pa paid twice yearly and rates in the marketplace are 9.4% pa compounded semi-annually. What is the value of the bond today? a. $98,975.05 b. $98,196.97 c. $100,000.00 d. $98,691.54 e. $84,263.76

A corporate bond was issued a few years ago at face value of $1,000 with a...

A corporate bond was issued a few years ago at face value of $1,000 with a YTM of 7% and quarterly paid coupons. Now with 12 years left until the maturity, the company has run into hard times and the yield to maturity has increased to 15%. 1) What is the bond price now? 2) Suppose the company defer the loss to future and will make good on the promised coupon payments. However, the deferred loss will finally drive the...

One year ago, you purchased a $1,000 face value bond at a yield to maturity of...

One year ago, you purchased a $1,000 face value bond at a yield to maturity of 9.45 percent. The bond has a 9 percent coupon and pays interest semiannually. When you purchased the bond, it had 12 years left until maturity. You are selling the bond today when the yield to maturity is 8.20 percent. What is your realized yield on this bond?

Subjects