You purchase a 3 year bond for $980 (FV=$1000). The bond pays a 5% annual coupon....

You purchase a 3 year bond for $980 (FV=$1000). The bond pays a 5% annual coupon.

What is the current yield of the bond?

If the YTM drops by 0.50% over the next year, what will be your total return over the next year?

What will be your capital gains/losses on the bond?

View keyboard shortcuts

EditInsertFormatToolsTable

12pt

Paragraph

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A 3-year $1000 face value bond pays an annual coupon of 8% and has a ytm...

A 3-year $1000 face value bond pays an annual coupon of 8% and has a ytm of 4%. What is this bond's price? What is this bond's duration?

There is a bond with FV = 1000, coupon rate of 10% paid annually and 5...

There is a bond with FV = 1000, coupon rate of 10% paid annually and 5 year maturity. At year 0, YTM = 8%. Given constant YTM, what is the bond price at time 1? What is capital gain yield and current yield? What are the prices of the bond in year 2, 3, 4, and 5? If at year 1, YTM becomes 12%, what is a bond price in year 1?

What is the duration of a 2 year bond that pays a 5% annual coupon with...

What is the duration of a 2 year bond that pays a 5% annual coupon with a 9% YTM? Use $1000 as the face value of the bond. Using the duration, what is the expected change in the bond if rates are expected to drop by 25 basis points?

If you have a 3 year $1000 bond with 10% annual coupon payments, what is the...

If you have a 3 year $1000 bond with 10% annual coupon payments, what is the yield to maturity? The bond has a present value of $1,153. What am I solving for? N? I/YR, PV? FV?

Kim Shaw is considering the purchase of a 5 year bond that pays a coupon rate of 7.75% over the life of the bond (annual payments) and a face value of $1000 that is returned at the bond's maturity.

Kim Shaw is considering the purchase of a 5 year bond that pays a coupon rate of 7.75% over the life of the bond (annual payments) and a face value of $1000 that is returned at the bond's maturity. Using a yield to maturity of 8.50%, calculate to the nearest penny the value of the bond today.

Problem 1 You buy a 5-year bond with a coupon rate of 6% for $1000 (annual...

Problem 1 You buy a 5-year bond with a coupon rate of 6% for $1000 (annual coupons paid). One year later, you sell the bond. At that time, the yield curve (based on zero coupon bonds) is as follows: T 1 2 3 4 5 rt% 5.50 6.50 7.25 7.75 8.00 a) What is the price of the bond in one year? b) What is the capital gain/loss on the sale of the bond? c) What is your return on...

6. What is the duration of a two-year bond that pays an annual coupon of 5%,...

6. What is the duration of a two-year bond that pays an annual coupon of 5%, returns the face value, and has a current yield to maturity of 4.5%. Use $1000 as the face value. (show the calculation, so i can study) 7. What is the duration of a two-year zero-coupon (principal-only) bond that is yielding 6% and $10,000 face value? Note: This bond does not have coupon payments but does return the face value. (show the calculation, so i...

A6-5. Suppose a $1000 bond pays annual “coupon interest” equal to 10% and matures in two...

A6-5. Suppose a $1000 bond pays annual “coupon interest” equal to 10% and matures in two years. If the yield on bonds with similar risk characteristics is 3%, the price of this bond today is greater than $1000. A6-6. Suppose the Bank of Canada (BOC) buys $10B worth of bonds from the Canadian banking system that operates with a desired reserve ratio of 5%. Immediately after the transaction, the balance sheet of the BOC expands by $10B, while balance sheet...

eddie bauer’s 5 year annual coupon bond is priced at $984.56.The bond has a $1000...

eddie bauer’s 5 year annual coupon bond is priced at $984.56. The bond has a $1000 face value and a yield to maturity of 6.5 percent. What is the coupon rate?6.74%6.34%2.50%3.17%

Suppose a ten-year bond $1,000 bond with a 5% coupon rate that pays annual coupons is...

Suppose a ten-year bond $1,000 bond with a 5% coupon rate that pays annual coupons is initially trading at par (at $1,000). After 5 years time, the bond’s yield to maturity falls to 4%. If you sell the bond after 5 years, what price will you receive

Subjects