A 6 percent coupon bond that has a $1,000 par value, semiannual
coupon payments and a yield to maturity of 5.25 percent. The bond
matures in 9 years.
What is the price of the bond, What will happen to the price if
market interest rates rise to 6.45 percent, what can you say about
the relationship between the price of a bond and the market
interest rate?
2. Consider the following 3 semiannual bonds with par
$1,000:
Bond A: 5-year bond with coupon rate 6%
Bond B: 10-year bond with coupon rate 6%
Bond C: 10-year bond with coupon rate 10%
Step 1: (1.5 points)
Calculate the prices of Bond A, Bond B, and Bond C based on the
required yield=7%.
Bond A =
Bond B =
Bond C =
Step 2: (3 points)
For each bond (Bond A, Bond B, or Bond C), conduct a scenario...
A coupon bond which pays interest of $50 annually, has a par
value of $1,000, matures in 10 years, and the interest rate is 12%,
what will be the bond price?
A company issued a 15-year bond with $1,000 face value and 8
percent coupon rate. If the required rate of return on
this bond is 10 percent, what will be the bond price?
Without using a financial calculator
Problem 5: Bond A pays 12% coupon annually, has a par value of
$1,000 and will mature in 3 years. Using a 10% discount rate
(Yield-to-Maturity), what is the value of the bond?
Problem 6: Using your information on Bond A above, calculate the
(Macaulay) duration of the bond.
Problem 7: What is the (Macaulay) duration of a bond with the
following characteristics: N = 5, PMT = 90, FV = 1000, I/Y =
12%?
Problem 8: What is the...
a company's bond have a par (face value of 1,000. the bond pays
semiannual interest of $40 and mature in five years. how much would
you pay for the bond if you required rate is 10% and how much would
you pay if your required rate is 8%
A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 5%?
2. A $1,000 par-value bond with 5 years of
maturity pays a 5% coupon rate, paid semi-annually. What is the
value of the bond if your required rate of return is 5%?
3. A $1,000 par-value bond with 5
years of maturity pays a 5% coupon rate, paid semi-annually. What...
1. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 5%?
2. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid semi-annually. What is the value of the bond if
your required rate of return is 5%?
3. A $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid...
A revenue bond matures in 15 year, pays a 5.5 percent coupon
rate every 6 months, and has a face value of $5,000. The market
interest rate for similar risk and maturity municipal bonds is 4
percent. What is the current price of the bond? What would the
price be if the market was 6 percent?
You invest in a 5-year bond (par=$1,000) with a coupon rate of
6%. The interest is paid annually, and its YTM is 4%. If you sell
the bond one year later, what is your holding period return?
A.
4.0%
B.
4.5%
C.
5.1%
D.
7.6%
You are evaluating a corporate bond issued by National Fishing
League (NFL). The NFL bond is a 4-year bond with a par value of $1
million. Its interest (coupon) payments are based on the following...
1. $1,000 par-value bond with 5 years of maturity pays a 5%
coupon rate, paid annually. What is the value of the bond if your
required rate of return is 12%?
2. A $1,000 par-value bond with 5 years of maturity pays 5%
coupon rate, paid semi-annually. What is the value of the bond if
your required rate of return is 12%?
3. AAA, Inc. currently has an issue of bonds outstanding that
will mature in 31 years. The bonds...