Question
In: Finance
You buy a(n) eight-year bond that has a 6.75% current yield and a 6.75% coupon (paid...
You buy a(n) eight-year bond that has a 6.75% current yield and a 6.75% coupon (paid annually). In one year, promised yields to maturity have risen to 7.75%. What is your holding-period return? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Holding-period return %
Solutions
Expert Solution
Purchase price = $1000
|
Using financial calculator BA II Plus - Input details: |
# |
|
I/Y = Rate or yield / frequency of coupon in a year = |
6.750000 |
|
PMT = Coupon rate x FV / frequency = |
-$67.50 |
|
N = Number of years remaining x frequency = |
8.00 |
|
FV = Future Value = |
-$1,000.00 |
|
CPT > PV = Present value of bond = |
$1,000.00 |
Value of bond one year later = $947.49
|
Using financial calculator BA II Plus - Input details: |
# |
|
I/Y = Rate or yield / frequency of coupon in a year = |
7.750000 |
|
PMT = Coupon rate x FV / frequency = |
-$67.50 |
|
N = Number of years remaining x frequency = |
7.00 |
|
FV = Future Value = |
-$1,000.00 |
|
CPT > PV = Present value of bond = |
$947.49 |
Holding period return = (Coupon + Value of bond one year later - Purchase price)/Purchase price
Holding period return = (67.5 + 947.49 - 1000)/1000
Holding period return = 1.50%
jeff jeffy answered 2 years agoRelated Solutions
You buy an eight-year bond that has a 5.50% current yield and a 5.50% coupon (paid...
You buy an eight-year bond that has a 5.50% current yield and a
5.50% coupon (paid annually). In one year, promised yields to
maturity have risen to 6.50%. What is your holding-period
return?
You buy a four-year bond that has a 3.50% current yield and a 3.50% coupon (paid...
You buy a four-year bond that has a 3.50% current yield and a
3.50% coupon (paid annually). In one year, promised yields to
maturity have risen to 4.50%. What is your holding-period return?
(Do not round intermediate calculations. Round your answer to 2
decimal places.) Holding-period return %
You buy a 20-year bond with a coupon rate of 9.6% that has a yield to...
You buy a 20-year bond with a coupon rate of 9.6% that has a
yield to maturity of 10.6%. (Assume a face value of $1,000 and
semiannual coupon payments.) Six months later, the yield to
maturity is 11.6%. What is your return over the 6 months?
A bond has a face value of $1,000, a coupon of 5% paid annually,
a maturity of 40 years, and a yield to maturity of 8%. What rate of
return will be earned by...
You buy a 20-year bond with a coupon rate of 9.6% that has a yield to...
You buy a 20-year bond with a coupon rate of 9.6% that has a
yield to maturity of 10.6%. (Assume a face value of $1,000 and
semiannual coupon payments.) Six months later, the yield to
maturity is 11.6%. What is your return over the 6 months?
1. You buy a 20-year bond with a coupon rate of 9.0%that has a yield...
1. You buy a 20-year bond with a coupon rate of 9.0%
that has a yield to maturity of 10.1%. (Assume a face value of
$1,000 and semiannual coupon payments.) Six months later, the yield
to maturity is 11.1%. What is your return over the 6
months?Rate of return:2. Consider two 30-year maturity bonds. Bond A has a
coupon rate of 4%, while bond B has a coupon rate of 12%. Both
bonds pay their coupons semiannually.a. Compute the prices...
You buy a five-year bond that has a 7% yield to maturity and a 7% coupon...
You buy a five-year bond that has a 7% yield to maturity and a
7% coupon paid annually. In one year, promised yields to maturity
have fallen to 6%. What is your holding period return? Answer in
percentages with two decimal places.
A(n) eight-year bond has a yield of 9% and a duration of 7.201 years. If the...
A(n) eight-year bond has a yield of 9% and a duration of 7.201
years. If the bond's yield increases by 25 basis points, what is
the percentage change in the bond's price? (Input the value
as a positive value. Do not round intermediate calculations. Round
your answer to 2 decimal places.)
The bond's price (Click to select)decreased
byincreased by %.
A 10-year, $1,000 par value bond has a 6.75% coupon rate with interest paid semiannually. The...
A 10-year, $1,000 par value bond has a 6.75% coupon rate with
interest paid semiannually. The bond currently sells for $850. What
is the capital gains yield on these bonds? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
Explain why yield to maturity is higher than current yield when you buy a coupon-bearing bond...
Explain why yield to maturity is higher than current yield when
you buy a coupon-bearing bond for less than its $1000 face
value?
If interest rates suddenly fall, would you rather be holding a
portfolio composing of short-term securities or long-term
securities?
A zero-coupon bond with face value of $10,000 that matures in
two years goes on sale today for $9,100. What is the bond’s yield
to maturity?
Using the bond described in the previous question, imagine that
you purchase...
What is the yield to maturity of a eight-year, $10,000 bond with a 5.1% coupon rate...
What is the yield to maturity of a eight-year, $10,000 bond with
a 5.1% coupon rate and semiannual coupons if this bond is currently
trading for a price of $8,928?
8.24%
6.86%
3.43%
9.61%
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- PLEASE DONT FORGET TO SOLVE THE ASSIGNMENT QUESTION MOST IMP: Ex1) Download the code from the...
- Customer is saying website is running slow when his end clients are trying to access the...
- Note: The answers to the following questions should be typed in the block of comments in...
- Python Describe the procedure for setting up the display of an image in a window.
- what are the fundamental similarity and differences between gap and dgap?
- Maria Gonzales is a 57-year-old operating room nurse who works full-time at a local hospital. She...
- Use the bond term's below to answer the question Maturity 7 years Coupon Rate 4% Face...
ADVERTISEMENT