A five-year bond with a $100 face value provides a coupon of 5%per annum payable...

A five-year bond with a $100 face value provides a coupon of 5% per annum payable semiannually. Its price is $100. What is the bond’s yield?

- please do not use excel. Explain step by step

Expert Solution

Information provided:

Face value= future value= $100

Current price= present value= $100

Time= 5 years*2 = 10 semi-annual periods

Coupon rate= 5% / 2 = 2.50%

Coupon payment= 0.025*100= $2.50

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 100

PV= -100

N= 10

PMT= 2.50

Press the CPT key and I/y to compute the yield to maturity.

The value obtained is 2.50.

Therefore, the yield to maturity is 2.50%*2 = 5%.

jeff jeffy answered 2 years ago

A 5-year bond with a face value of $1,000 pays a coupon of 4% per year...

A 5-year bond with a face value of $1,000 pays a coupon of 4% per year (2% of face value every six months). The reported yield to maturity is 3% per year (a six-month discount rate of 3/2 =1.5%). What is the present value of the bond?

A $1,000 face value,semi-annual coupon bond,with a coupon rate of 6.00% per annum has a maturity...

A $1,000 face value,semi-annual coupon bond,with a coupon rate of 6.00% per annum has a maturity of five years. This bond currently yields 7.00% per annum,compounded semi-annually. At the end of two years,this bond sells for $1,030.00. a)What price would you pay for the bond now? b)What is the holding period yield? c)What is the default risk for a bond?Explain carefully why this risk arises for a bond. Part 2 In relation to the share market,explain what is meant by...

A five-year $1000 face value bond has a 5% coupon rate and a 10% yield to...

A five-year $1000 face value bond has a 5% coupon rate and a 10% yield to maturity. It makes annual coupon payments selling for $810.46. Please calculate this bond’s (20 points) Macaulay duration Modified duration Convexity If the interest rate rises by 100 bps, what would be the dollar amount change in price?

Consider a 10-year bond with a face value of $100 that pays an annual coupon of...

Consider a 10-year bond with a face value of $100 that pays an annual coupon of 8%. Assume spot rates are flat at 5%. a.Find the bond’s price and modified duration. b.Suppose that its yields increase by 10bps. Calculate the change in the bond’s price using your bond pricing formula and then using the duration approximation. How big is the difference? c.Suppose now that its yields increase by 200bps. Repeat your calculations for part b.

Consider a 5% 1 year to maturity coupon bond with a face value of $100. If the price of the bond is $90, what is the yield to maturity?

(i) A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon...

(i) A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon paid in arrears annually) has yield-to-maturity 4.5%. What is the convexity of the bond? (ii)Assume that stock returns follow a 2-factor structure. The risk-free return is 3%. Portfolio A has average return 8% and factor-betas 0.7 and 0.9 (for factor 1 and 2, respectively). Portfolio B has average return 10% and factorbetas 1.2 and 1.1 (for factor 1 and 2, respectively). What is the...

A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon paid...

A 5-year bond with face value $1,000 (paid at maturity) and coupon rate 5% (coupon paid in arrears annually) has yield-to-maturity 4.5%. What is the convexity of the bond?

On 15 January, 2021, you bought a Government bond, with a face value of $1,000; a term to maturity of 5 years; a coupon rate of 6% per annum

On 15 January, 2021, you bought a Government bond, with a face value of $1,000; a term to maturity of 5 years; a coupon rate of 6% per annum payable yearly, and a yield to maturity of 5% per annum. You paid the market price of $1,043.76 for the bond. On 15 January, 2022, you sold the bond to Jill, providing her with a yield to maturity of 4% per annum. [NOTE: You bought and sold the bond immediately after...

Suppose that you bought a five year coupon bond with $20,000 face value, 7% coupon rate...

Suppose that you bought a five year coupon bond with $20,000 face value, 7% coupon rate and 7% yield to maturity. After holding it for a year and collecting the first coupon payment you decide to sell it. Calculate the return (in %) on this investment if the interest rate has increased to 9% while selling the bond.

A 5-year bond with a face value of $1000 has a coupon rate of 6%, with...

A 5-year bond with a face value of $1000 has a coupon rate of 6%, with semiannual payments. What is the coupon payment for this bond per 6-month period? A. $60 B. not enough information C. $30

Question