Question
In: Finance
Question 1- A 3-year bond carrying 3.4% annual coupon and $100-par is putable at par 1...
Question 1-
A 3-year bond carrying 3.4% annual coupon and $100-par is putable at par 1 year and 2 years from today. Calculate the value of the putable bond under the forward rate curve below.
1-year spot rate: 2.0%;
1-year spot rate 1 year from now: 2.6%;
1-year spot rate 2 years from now: 4.1%.
Assume annual compounding. Round your answer to 2 decimal places (nearest cent).
Question 2-
A 3-year bond carrying 3.4% annual coupon and $9,000-par is putable at par 1 year and 2 years from today. Calculate the value of the underlying straight bond under the forward rate curve below.
1-year spot rate: 2.1%;
1-year spot rate 1 year from now: 2.7%;
1-year spot rate 2 years from now: 4.2%.
Assume annual compounding. Round your answer to 2 decimal places (nearest cent).
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A 3-year bond carrying 3.4% annual coupon and $100-par is putable at par 1 year and...
A 3-year bond carrying 3.4% annual coupon and $100-par is
putable at par 1 year and 2 years from today. Calculate the value
of the putable bond under the forward rate curve below.
1-year spot rate: 2.1%;
1-year spot rate 1 year from now: 2.5%;
1-year spot rate 2 years from now: 3.8%.
Assume annual compounding. Round your answer to 2 decimal places
(nearest cent).
A 3-year bond carrying 3.5% annual coupon and $100-par is putable at par 1 year and...
A 3-year bond carrying 3.5% annual coupon and $100-par is
putable at par 1 year and 2 years from today. Calculate the value
of the putable bond under the forward rate curve below.
1-year spot rate: 1.6%;
1-year spot rate 1 year from now: 2.8%;
1-year spot rate 2 years from now: 4.3%.
Assume annual compounding. Round your answer to 2 decimal places
(nearest cent).
Consider the same 3 year bond with a $100 par value and a 5% annual coupon...
Consider the same 3 year bond with a $100 par value and a 5%
annual coupon where comparable bonds are yielding 6% (assume
continuous compounding). If the yield goes up 1%, then according to
the duration formula for a bond's price change, the bond price will
change by: (Present decreases as negative values, increases as
positive values)
For a 3 year annual bond, currently priced at $78, par value $100, with coupon rate...
For a 3 year annual bond, currently priced at $78, par value
$100, with coupon rate 3%. tax rate by 30%. How much is the cost of
debt after tax? Remember to keep at least 4 decimals.
KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon...
KFA has issued a 100-year coupon bond with par of $1,000, and a
6.50% annual coupon paid semi-annually. Calculate its price for
each of the following three YTM scenarios: 4.0%, 6.0%, and
8.0%.
KFA has issued a 100-year coupon bond with par of $1,000, and a 6.50% annual coupon...
KFA has issued a 100-year coupon bond with par of $1,000, and a
6.50% annual coupon paid semi-annually. Calculate its price for
each of the following three YTM scenarios: 4.0%, 6.0%, and
8.0%.
Input:
Output:
Par ($)
1,000.00
Years to maturity
100
Annual coupon rate
6.50%
Coupons per year
2
Price
Yield to maturity
4.0%
Yield to maturity
6.0%
Yield to maturity
8.0%
KFA is evaluating a project with the following cash flows in the
first 4...
1.An investor buys a 9-year, 6.9% annual coupon bond at par ($100). After the purchase and...
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...
you own a 15 - year 100 par bond. The coupon rate is an annual 9%...
you own a 15 - year 100 par bond. The coupon rate is an annual
9% payable annually. The price of the bond is 95.50
D. Calculate the approximate change in price of the bond if the
yield rate increas by 0.5% using First Order Macaulay
Approximation
E. Calculate the approximate change in price of the bond if the
yield rate increase by 0.5% using First Order Modified
Approximation
F. Calculate the exact change in price of the bond
A 3-year $100 par value bond pays 9% annual coupons. The spotrate of year 1...
A 3-year $100 par value bond pays 9% annual coupons. The spot
rate of year 1 is 6%, the 2- year spot rate is 12%, and the 3-year
spot rate is 13%.a) Determine the price of the bondb) Determine the yield to maturity of the bondA 2-year $100 par value bond pays 5% semi-annual coupons. The
6-month spot rate is 2%, the 1-year spot rate is 2.5%, the 18-month
spot rate is 3% and the 2-year spot rate is 4%.c)...
Find the duration of a 3-year bond with annual coupon payments of $80 and a par...
Find the duration of a 3-year bond with annual coupon payments
of $80 and a par
value of $1,000. The current market price of the bond is
$950.25. If the YTM of
the bond dropped by 1%, what would happen to the bond price?
NOTE: please help especially on the duration part
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