Question
In: Finance
You buy a bond for $970 that has a coupon rate of 7.00% and a maturity...
You buy a bond for $970 that has a coupon rate of 7.00% and a maturity of 9-years. A year later, the bond price is $1,120. (Assume a face value of $1,000 and annual coupon payments.)
a. What is the new yield to maturity on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. What is your rate of return over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate =...
Assume you buy a bond with the following features
Bond maturity = 4
Coupon Rate = 3%
Face Value = $1,000
Annual Coupons
When you buy the bond the market interest rate = 4.76%
Immediately after you buy the bond the interest rate changes to
6.67%
What is the "reinvestment" effect in year 3 ?
Can you show me how to do it step by step in a financial
calculator?
Bond Features Maturity (years) 5 Face Value = $1,000 Coupon Rate = 7.00% Coupon dates (Annual)...
Bond Features
Maturity (years)
5
Face Value =
$1,000
Coupon Rate =
7.00%
Coupon dates (Annual)
Market interest rate today
7.00%
Time to call (years)
3
Price if Called
$1,070.00
Market interest rate in Year 3
5.00%
The above bond is callable in 3 years. When the bond is issued
today, interest rates are 7.00% . In 3 years, the market interest
rate is 5.00% . Should the firm call back the bonds in year 3 and
if so, how...
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.
What is the coupon rate of an annual coupon bond that has a yield to maturity...
What is the coupon rate of an annual coupon bond that has a
yield to maturity of 5.5%, a current price of $949.81, a par value
of $1,000 and matures in 15 years?
6.33%
4.70%
3.07%
5.00%
A 7.00 percent coupon bond with 25 years left to maturity is priced to offer a...
A 7.00 percent coupon bond with 25 years left to maturity is
priced to offer a 5.6 percent yield to maturity. You believe that
in one year, the yield to maturity will be 6.1 percent.
What would be the total return of the bond in dollars? (Assume
interest payments are semiannual.)
What would be the total return of the bond in percent? (Assume
interest payments are semiannual.)
A tax-exempt municipal bond with a coupon rate of 7.00% has a market price of 98.35%...
A tax-exempt municipal bond with a coupon rate of 7.00% has a
market price of 98.35% of par. The bond matures in 8.00 years and
pays semi-annually. Assume an investor has a 38.00% marginal tax
rate. The investor would prefer otherwise identical taxable bond if
it's yield to maturity was more than _____%
Answer format: Percentage Round to: 2
decimal places (Example: 9.24%, % sign required. Will accept
decimal format rounded to 4 decimal places (ex: 0.0924
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?
Assume that you wish to buy a bond with 19 years to maturity, with a par value of $1,000, and a coupon rate of 20.02%.
Assume that you wish to buy a bond with 19 years to maturity,
with a par value of $1,000, and a coupon rate of 20.02%. Assume
semi-annual payments. If the yield to maturity (YTM) is 20.69%,
what is today's price of this bond?
You find a bond with 29 years until maturity that has a coupon rate of 9.5...
You find a bond with 29 years until maturity that has a coupon
rate of 9.5 percent and a yield to maturity of 8.9 percent. Suppose
the yield to maturity on the bond increases by 0.25 percent.
a. What is the new price of the bond using
duration and using the bond pricing formula?
Estimated price:
Actual price:
b. Now suppose the original yield to maturity
is increased by 1 percent. What is the new price of the bond?
Estimated...
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