Citigroup Inc. is going to issue a bond with face value of $100, coupon rate of...

Citigroup Inc. is going to issue a bond with face value of $100, coupon rate of 3.50%, semiannual coupon payments, maturity of 11 years, and a yield to maturity of 6.00% APR. This bond will allow Citigroup to not make coupon payments for the first 4 years (hence, no coupon payments until after year 4). What is this bond’s price?

Group of answer choices

$85.88

$60.50

$67.79

$80.08

Solutions

Expert Solution

Calc:

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

A bond has a 10 percent coupon rate and a $100 face value. Interest is paid...

A bond has a 10 percent coupon rate and a $100 face value. Interest is paid semi-annually and the bond has 20 years to maturity. If investors require a 12 percent pa yield, what is the bond's value? How can I solve this question. Can you please explain the formula for bond's value Thank you

Creative Financing Inc. is planing to issue a 15-year, $1,000 face value bond with a coupon...

Creative Financing Inc. is planing to issue a 15-year, $1,000 face value bond with a coupon rate that changes every five years. The coupon rate for the first five years is 10%, 10.75% the next five years, and 11.5% for the remaining five years. If the yield on this bond is 11%, how much would you be willing to pay for this bond?

Consider a bond with market value $92.37 (face value = $100) and a coupon of $5.059...

Consider a bond with market value $92.37 (face value = $100) and a coupon of $5.059 dollars paid every six months (Semi-annually - December and June). The time to maturity is 10 semiannual periods. Assume today is January 1st, 2015. Therefore, the face value of the bond will be repaid on December 2019. Upload your spreadsheet on the course website (you might want to use the spreadsheet “11 Bond Yield and Duration Example” that we analyzed in class as a...

Great company is going to issue new coupon bonds. The bond issue is going to have...

Great company is going to issue new coupon bonds. The bond issue is going to have the following characteristics: bonds mature in 8 years from now and carry 4% coupon rate paid out quarterly. The par value of a bond is $5000 and the prevailing market interest rate for bonds with similar and maturity is 6%. Altogether 12000 bonds will be issued. a) Find the value of a single bond issue by Great company b) How much capital is company...

Suppose a 15-year bond with $100 face value, 8.00% coupon rate and semiannual coupons is currently...

Suppose a 15-year bond with $100 face value, 8.00% coupon rate and semiannual coupons is currently trading at par. All else constant, if the yield to maturity of the bond suddenly changes to 7.00% APR, what will happen to this bond’s price? Group of answer choices it will decrease by $9.108 it will decrease by $8.745 it will increase by $9.196 it will stay the same

Suppose a 15-year bond with $100 face value, 5.50% coupon rate and quarterly coupons is currently...

Suppose a 15-year bond with $100 face value, 5.50% coupon rate and quarterly coupons is currently trading at par. All else constant, if the yield to maturity of the bond suddenly changes to 8.00% APR, what will happen to this bond’s price?

1).Consider a zero coupon bond with 10 years maturity with face value $100. The internal rate...

1).Consider a zero coupon bond with 10 years maturity with face value $100. The internal rate of return (IRR, y) is 8% and the daily volatility of the IRR is 0.0007 (7 basis points). Required: • Compute the percentage VaR over 1-day and under 99% confidence level. • Compute the dollar VaR over 1-day and under 99% confidence level. 2).Consider the risk of a short position on a call option. The VaR of its underlying asset is 2000. The delta...

Compute the duration of a bond with a face value of $1,000, a coupon rate of...

Compute the duration of a bond with a face value of $1,000, a coupon rate of 7% (coupon is paid annually) and a yield to maturity of 7% for maturities of 2 to 18 years in 1-year increments (so here we are going to vary the time to maturity and see how duration changes if N=2, 3 … etc.). What happens to duration as maturity increases?

Compute the duration of a bond with a face value of $1,000, a coupon rate of...

Compute the duration of a bond with a face value of $1,000, a coupon rate of 7% (coupon is paid annually) and a maturity of 10 years as the interest rate (or yield to maturity) on the bond changes from 2% to 12% (consider increments of 1% - so you need to compute the duration for various yields to maturity 2%, 3%, …, 12%) . What happens to duration as the interest rate increases?

2. The effect of the coupon rate and the face value of a bond Galego &...

2. The effect of the coupon rate and the face value of a bond Galego & Alden Corporation issues a 15-year bond with a fixed coupon rate of 3%. Suppose, that the inflation rate over the period is 7%. In 15 years, Galego & Alden ____________ (in real terms will benefit / in real terms will be financially unaffected / in real terms will suffer) because: A- Inflation increases the real value of the coupon payments by the same amount...

Subjects