Question

NEED ONLY ANSWERS ASAP

Q1 - What is the expected price of the following bond?

Par value: $1,000

Years to maturity: 30 years

Coupon rate: 8% paid semiannually

Beta: 0.5

Assume:

Risk-free rate: 4%

Market risk premium: 8%

Select one:

a. $1,000.00

b. $1,090.22

c. $1,012.98

d. $9,90.22

Q2 - What is the interest rate of the following bond, assuming that the market for the bond is in equilibrium?

      Par value: $1,000

      Years to maturity: 15 years

      Coupon rate: 8% paid semiannually

      Current market price: $1,200

Select one:

a. 5.96%

b. 3.46%

c. 4.21%

d. 5.28%

e. 2.98%

Q-3 5 years ago, you bought a Ford bond. At the time of the purchase, the bond had a coupon rate of 8% paid semiannually, a par value of $1,000, and a time to maturity of 25 years. What is the expected price of the bond today if the interest rate is 12%?

Select one:

a. $699.07

b. $697.43

c. $701.65

d. 703.87

Q4 - What is the current market risk premium implied by the following information about EEM Company’s bonds, assuming that the market for the bonds is in equilibrium?

Par value: $1,000

Years to maturity: 20 years

Coupon rate: 8% paid semiannually

Current market price: $980

Current risk-free rate: 5%

Beta of the bond: 0.5

Select one:

a. 6.41%

b. 7.50%

c. 8.12%

d. 6.00%

e. 8.56%

Q5 - Based on the following information concerning XRT's bonds:

Par value: $1,000

Years to maturity: 15 years

Coupon rate: 8% paid semiannually

Beta: 0.5

Risk-free rate: 4%

Market risk premium: 5%

What is the expected price of the bond in 5 years? You believe that the risk free rate then is likely to drop to 2% and the market risk premium is like to rise to 10% due to a worsening economic outlook.

Select one:

a. $1,071.06

b. $1,056.86

c. $1,063.87

d. $1,080.01

Q6 - Given the following information, what is the coupon rate of the bond?

Years to maturity: 25

Par value: $1,000

Interest rate: 10%

Current market price$1,150

Coupon payments are made semiannually.

Select one:

a. 11.64%

b. 11.12%

c. 9.95%

d. 8.60%

e. 7.27%

Q7 - Four years ago you bought a bond at $860. At the time of the purchase, the bond had a coupon rate of 8% paid semiannually, a par value of $1,000, and a maturity of 12 years. If you sell the bond at the current price of 950, what is your realized rate of return from this investment?

Select one:

a. 11.44%

b. 12%

c. 10.75%

d. 10%

e. 9.43%

Q8- You are considering buying a bond. The bond has a current price of $1,125, a coupon rate of 8% paid semiannually, a par value of 1,000, and a maturity of 10 years. You plan to hold the bond for only 4 years, that is, to sell the bond at the end of year 4. You expect the interest rate for the bond at the time of sale to be 7%. What is your expected rate of return from this investment?

Select one:

a. 5.57%

b. 5.95%

c. 6.33%

d. 7%

Q9 - Given the following information on a bond, if the interest rate increases by 1% (that is, from 5% to 6%), what is the change in the price of the bond based on duration?

Current market price = $1050

Duration, D = 7.5

Yield to maturity = 5%

Select one:

a. A decrease of $75.00

b. An increase of $75.23

c. A decrease of $72.78

d. An increase of $74.00

Q10 - For the following bond,

Par value: 1,000

Coupon rate: 8% paid annually

Time to maturity: 3 years

Interest rate: 4%

What is the modified duration?

Select one:

a. 2.6875 years

b. 2.145 years

c. 3.361 years

d. 3.600 years

Answer 1

Q1 - What is the expected price of the following bond?

=PV((4%+0.5*8%)/2,30*2,8%*1000/2,1000)

a. $1,000.00

Q2 - What is the interest rate of the following bond, assuming that the market for the bond is in equilibrium?

=2*RATE(15*2,8%*1000/2,-1200,1000)

a. 5.96%

Q-3 5 years ago, you bought a Ford bond. At the time of the purchase, the bond had a coupon rate of 8% paid semiannually, a par value of $1,000, and a time to maturity of 25 years. What is the expected price of the bond today if the interest rate is 12%?

=PV(12%/2,20*2,8%*1000/2,1000)

a. $699.07

Q4 - What is the current market risk premium implied by the following information about EEM Company’s bonds, assuming that the market for the bonds is in equilibrium?

=(RATE(20*2,8%*1000/2,-980,1000)*2-5%)/0.5

a. 6.41%

Q5 - Based on the following information concerning XRT's bonds:

=PV((2%+10%*0.5)/2,10*2,8%*1000/2,1000)

a. $1,071.06

Q6 - Given the following information, what is the coupon rate of the bond?

Semi-annual Coupon=PMT(10%/2,2*25,-1150,1000)=58.22

Annual Coupon rate=58.22*2/1000=11.64%

a. 11.64%

Q7 - Four years ago you bought a bond at $860. At the time of the purchase, the bond had a coupon rate of 8% paid semiannually, a par value of $1,000, and a maturity of 12 years. If you sell the bond at the current price of 950, what is your realized rate of return from this investment?

=RATE(4*2,8%*1000/2,-860,950)*2

a. 11.44%

Q8- You are considering buying a bond. The bond has a current price of $1,125, a coupon rate of 8% paid semiannually, a par value of 1,000, and a maturity of 10 years. You plan to hold the bond for only 4 years, that is, to sell the bond at the end of year 4. You expect the interest rate for the bond at the time of sale to be 7%. What is your expected rate of return from this investment?

=RATE(4*2,8%*1000/2,-1125,-PV(7%/2,2*6,8%*1000/2,1000))*2

a. 5.57%

Q9 - Given the following information on a bond, if the interest rate increases by 1% (that is, from 5% to 6%), what is the change in the price of the bond based on duration?

Change in Price=Price*-Duration/(1+ytm)*Change in yield=1050*-7.5%/(1+5%)=-75

a. A decrease of $75.00