A bond is in a risk class that pays 5% per year. The bond pays
annual...
A bond is in a risk class that pays 5% per year. The bond pays
annual interest of $400 (and the first interest payment is one year
from today) and will mature in 10 years at a value of $10,000. What
is the price of the bond?
What is the duration of a 2 year bond that pays a 5% annual
coupon with a 9% YTM? Use $1000 as the face value of the bond.
Using the duration, what is the expected change in the bond if
rates are expected to drop by 25 basis points?
Suppose a ten-year bond $1,000 bond with a 5% coupon rate that
pays annual coupons is initially trading at par (at $1,000). After
5 years time, the bond’s yield to maturity falls to 4%. If you sell
the bond after 5 years, what price will you receive
6. What is the duration of a two-year bond that pays an annual
coupon of 5%, returns the face value, and has a current yield to
maturity of 4.5%. Use $1000 as the face value. (show the
calculation, so i can study)
7. What is the duration of a two-year zero-coupon
(principal-only) bond that is yielding 6% and $10,000 face value?
Note: This bond does not have coupon payments but does return the
face value. (show the calculation, so i...
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?
You purchase a 3 year bond for $980 (FV=$1000). The bond pays a
5% annual coupon.
What is the current yield of the bond?
If the YTM drops by 0.50% over the next year, what will be your
total return over the next year?
What will be your capital gains/losses on the bond?
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An 8%, 8-year bond pays annual coupons and has 5 years to
maturity. If the market interest rate is 9%, calculate the value of
the bond. Show the (condensed) time line and key steps of two
methods. For the NS method, show the abbreviated
equation/expression.
A 30-year bond is purchased at a discount. The bond pays annual
coupons. The amount for accumulation of discount in the 15th coupon
is 147. The amount for accumulation of discount in the 19th coupon
is 200. Calculate the amount of discount in the purchase price of
this bond
A 20-year bond with a face value of $1,000 will mature in 8 years. The bond pays semi-annual coupons at 5% p.a. compounding half-yearly. Mia wants to purchase the bond at a price which gives her a yield to maturity of 6% p.a. compounding half-yearly. Calculate the maximum price Mia should pay for the bond. (Round your answer to the nearest cent).