Question
In: Finance
A bond has a coupon rate of 7.5% paid semiannually, a par value of $1000, a...
A bond has a coupon rate of 7.5% paid semiannually, a par value of $1000, a maturity of 10 years and a yield to maturity of 9%. You are thinking about buying this bond but are unsure about the actual cash outlay required to do so. The last interest payment was December 13, 2018. If you purchase the bond, the transaction will settle on February 25, 2019. There are 75 days between these two dates.
a) Find the clean price of the bond.
b) Find the dirty price of the bond.
c) How much would the cash outlay change if you decided to wait one week before purchasing the bond?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
What is the price of a 1000 par value bond with a coupon rate of 7.5...
What is the price of a 1000 par value bond with a coupon rate of
7.5 annual payments that matures 11 years assuming the bonds ytm is
3.84
A $1,000 par value bond has an 8% coupon rate (paid semiannually). It has 5 years...
A $1,000 par value bond has an 8% coupon rate (paid
semiannually). It has 5 years remaining to maturity. If bond’s
current price $1,085.30, what should be the YTM of this bond?
a. 6%
b. 3.69%
c. 7.37%
d. 3%
A $1,000 par value bond has an 8% coupon rate (paid semiannually). It has 5 years...
A $1,000 par value bond has an 8% coupon rate (paid
semiannually). It has 5 years remaining to maturity. If current
market interest rate is 6%, what should be the current price of
this bond?
a. $1,000
b. $1,268.40
c. $918.89
d. $1,085.30
1) a. Consider a $1,000 par value bond with a 6% coupon rate paid semiannually, and...
1)
a. Consider a $1,000 par value bond with a 6% coupon rate paid
semiannually, and has 9 years to maturity. What is the price of the
bond if it is priced to yield 7%?
b. Cutler Co. issued 11-year bonds a year ago at a
coupon rate of 7.8 percent. The bonds make semiannual payments. If
the YTM on these bonds is 8.6 percent, what is the current bond
price?
c. A $1000 bond with a coupon rate of 6.2%...
A 20-year, $1,000 par value bond has a 7.50% coupon rate with interest paid semiannually. The...
A 20-year, $1,000 par value bond has a 7.50% coupon rate with
interest paid semiannually. The bond currently sells for $875. What
is the capital gains yield on these bonds? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
A 20-year, $1,000 par value bond has a 7.50% coupon rate with interest paid semiannually. The...
A 20-year, $1,000 par value bond has a 7.50% coupon rate with
interest paid semiannually. The bond currently sells for $800. What
is the capital gains yield on these bonds? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
A 20-year, $1,000 par value bond has a 7.50% coupon rate with interest paid semiannually. The...
A 20-year, $1,000 par value bond has a 7.50% coupon rate with
interest paid semiannually. The bond currently sells for $800. What
is the capital gains yield on these bonds? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
A 10-year, $1,000 par value bond has a 6.75% coupon rate with interest paid semiannually. The...
A 10-year, $1,000 par value bond has a 6.75% coupon rate with
interest paid semiannually. The bond currently sells for $850. What
is the capital gains yield on these bonds? Enter your answer
rounded to two decimal places. Do not enter % in the answer box.
For example, if your answer is 0.12345 or 12.345% then enter as
12.35 in the answer box.
Consider a $1000 par value, 7.5% coupon bond (coupon payments are made quarterly) that has 12...
Consider a $1000 par value, 7.5% coupon bond (coupon payments
are made quarterly) that has 12 years remaining to maturity. The
bond has a yield to maturity of 6.98%. If you buy the bond today
expecting to hold it to maturity and believe you can reinvest the
quarterly coupon payments at an annual nominal rate of 5.25%
through maturity, what is the total return you expect to earn on
this investment? Compute all intermediate step values to 4 decimal
places...
A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity...
A $1000 bond with a coupon rate of 6.2% paid semiannually has
eight years to maturity and a yield to maturity of 8.3%. If
interest rates rise and the yield to maturity increases to 8.6%,
what will happen to the current yield of the bond?
A.
The current yield will decrease by 0.129%.
B.
The current yield will increase by 0.3%.
C.
The current yield will decrease by 0.3%
D.
The current yield will increase by 0.129%.
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