Question

In: Finance

An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...

An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that coupon is paid semi-annually and face value is $1,000.

(a) Calculate the price of the bond. (Keep 2 decimal places, e.g. 90.12)
(b) Calculate the duration of the bond. (Keep 4 decimal places, e.g. 5.1234)
(c) Calculate this bond's modified duration. (Keep 4 decimal places, e.g. 5.1234)
(d) Assume that the bond's yield to maturity increases from 7% to 7.2%, estimate the new price of the bond. (Keep 2 decimal places, e.g. 90.12)

Solutions

Expert Solution

Assumption

Yield of 7% is semi annual ytm

jeff jeffy answered 7 months ago
Next > < Previous

Related Solutions

An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that coupon is paid semi-annually and face value is $1,000. (a) Calculate the price of the bond. (Keep 2 decimal places, e.g. 90.12) (b) Calculate the duration of the bond. (Keep 4 decimal places, e.g. 5.1234) (c) Calculate this bond's modified duration. (Keep 4 decimal places, e.g. 5.1234) (d) Assume that the bond's yield to maturity increases from 7% to 7.2%, estimate the new price...
A zero-coupon bond with 4 years to maturity and the yield to maturity of 8%. When...
A zero-coupon bond with 4 years to maturity and the yield to maturity of 8%. When the yield increases, the duration of this bond decreases. a. True b. False 2) A bond issuer often repurchases Callable bonds for a discount bond. a. True b. False Credit Default Swap (CDS) is an insurance policy on default risk of corporate bond or loan. a. True b. False 4) The delivery of the underlying asset is seldom made in forward contracts while the...
A bond has a maturity of 10 years, has 8% coupon rate(paid annually) and the yield...
A bond has a maturity of 10 years, has 8% coupon rate(paid annually) and the yield to maturity is 10%. WHat is the price of the bond? (face value is 1000)
Bond Coupon Rate Yield Maturity Duration A 7% 3.5% 4 Years B Zero Coupon 5.25% 8...
Bond Coupon Rate Yield Maturity Duration A 7% 3.5% 4 Years B Zero Coupon 5.25% 8 Years A) Compute the duration of each bond, assuming annual interest payments for the coupon bonds. Show your work below. (10 points) B) What is the duration-predicted price change for each bond for a 1% increase in rates? Show your work below. (15 points)
A 12 year bond 1000 face value bond has an 8% annual coupon and a yield to maturity of 7%
A 12 year bond 1000 face value bond has an 8% annual coupon and a yield to maturity of 7%, what will be the price of the bond 3 years from today?
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon...
Calculate the price of this bond: Yield = 5.55%, Time to maturity = 7 years, Coupon rate = 4.6%, Pays = annually. 948.85 990.87 690.83 946.11 None of the above
A zero coupon bond with 2.5 years to maturity has a annualized yield to maturity of...
A zero coupon bond with 2.5 years to maturity has a annualized yield to maturity of 5%. A 3-year maturity annual-pay coupon bond has as face value of $1000 and a 5% coupon rate. The coupon bond also has a yield to maturity of 5%. Please calculate the duration of each bond. Which bond has the higher duration and why? Using the formula that approximates bond price change as a function of the duration, please calculate the price change of...
A ten year bond has a coupon rate of 7% and a yield to maturity of...
A ten year bond has a coupon rate of 7% and a yield to maturity of 9%, will you be willing to pay $1100 for this bond. Please explain.
Assume you own a bond with a 5% coupon, a 6% yield-to-maturity, 5 years to maturity,...
Assume you own a bond with a 5% coupon, a 6% yield-to-maturity, 5 years to maturity, and a $1,000 par value. It is currently priced at $957.35. If the yield-to-maturity increases to 8.0%, what is the price of the bond? Select one: a. $1,043.76 b. $878.33 c. $1,000 d. $1,087.52
Consider a bond with a 10% coupon and with yield to maturity = 8%. If the...
Consider a bond with a 10% coupon and with yield to maturity = 8%. If the bond’s YTM remains constant, then in one year, will the bond price be higher, lower, or unchanged? Please explain your answer and give examples to help demonstrate your explanation.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT