An investor buys a 5% annual coupon, 5 year bond for
$1100. If the YTM is expected...
An investor buys a 5% annual coupon, 5 year bond for
$1100. If the YTM is expected to remain constant over
the next year, what return should the investor earn from the change
in price of the bond? Group of answer choices
An investor buys a 5-year bond with a coupon rate of 6.5% at a
price that reflects a yield to maturity of 10.9%. Interest is paid
semiannually. Exactly one year later, after receiving the second
coupon payment, the investor sells the bond for 97% of par value.
What was the investor’s rate of return on the bond investment for
the year? Enter your answer as a decimal out to four decimal
places. As an example, you would enter 1.146% as...
1. An investor buys a 20-year semiannual bond with a coupon rate
of 5% for $950. He plans to hold the bond for 8 years and then sell
it. The investor expects to reinvest the first 6 coupon payments at
4.5% and the next 10 payments at 5.5%. He also expects that the
bond’s YTM at the end of the holding period to be 6%. Under these
assumptions, the total interest amount is
A. $420.63 B. $450.85 C. $474.51 D....
.
An investor buys a 10 year, 8% annual coupon bond at par (so
the yield-to-maturity must be 8%), and sells it after three years
(just after the coupon is recieved). Interest rates rise
immediately after the purchase, and the bond’s yield-to-maturity
jumps to 10% and remains there for the rest of the three year
period. Assume coupons are reinvested at the new
yield-to-maturity.
Show the components of the investor’s “total return,” or
portfolio value at the end of the...
An investor buys a bond with a $100 par value and a 5% coupon
rate for $97. The bond pays interest semiannually. Exactly one year
later, just after receiving the second coupon payment, the investor
sells the bond for $96. What was the investor’s rate of return over
the year from owning the bond?
How do you get the answer using a financial calculator?
The YTM (yield to maturity) on a one-year zero-coupon bond is 5%
and the YTM on a two-year zero-coupon bond is 6%. The treasury is
planning to issue a 2-year, annual coupon bond with a coupon rate
of 7% and a face value of $1,000.
a) Compute the value of the two-year coupon bond.
b) Compute the yield to maturity of the two-year coupon
bond.
c) If the expectations hypothesis is correct, what is the market
expectation of the price...
1.An investor buys a 9-year, 6.9% annual coupon bond at par
($100). After the purchase and before the first coupon is received,
interest rates increase to 8.9% (assume a flat spot rate curve).
The investor sells the bond after 7 years (right after receiving
the 7th coupon payment). What is this investor's realized annual
return in these 7 years?
Assume annual compounding, and that interest rates remain at
8.9% over the entire holding period.
2.An investor with an investment horizon...
Suppose a 5% coupon, 5-year bond is selling for $1100. The
coupon is paid every six months. The principal value is $1000.
(1) Calculate the yield to maturity of this bond. .
(Hint: Use the Yield function in Excel.)
(2) Calculate the price of this bond if the yield to maturity
increases by 1% with maturity unchanged. .
(3) Calculate the price of this bond if the yield to maturity
decreases by 1% with maturity unchanged. .
Suppose a 5% coupon, 5-year bond is selling for $1100. The
coupon is paid every six months. The principal value is $1000.
(1) Calculate the yield to maturity of this bond. .
(Hint: Use the Yield function in Excel.)
(2) Calculate the price of this bond if the yield to maturity
increases by 1% with maturity unchanged. .
(3) Calculate the price of this bond if the yield to maturity
decreases by 1% with maturity unchanged. .
Suppose you observe that the YTM on a 1-year zero-coupon bond is
5%, and the YTM on a 2-year zero-coupon bond is 6%. The YTM on a
2-year annual coupon bond with a 12% coupon rate is 5.8%. Assume
all three bonds are riskless. If you were to repackage the 2-year
coupon bond as two zero-coupon bonds, how much should you be able
to sell them for? Please express your answer in dollars, rounded to
the nearest cent