Question

In: Finance

Beulah buy a portfolio consisting of a 6 month Zero Coupon Bond with maturity value of...

Beulah buy a portfolio consisting of a 6 month Zero Coupon Bond with maturity value of $1,000 and a 1-year Zero Coupon Bond with maturity value of $2,000. If she paid $2766.44 for the portfolio then, algebraically find the yield to maturity of the portfolio. Your answer should be correct to 3 places after the decimal point and stated as per annum compound semiannually. Yield_____

Solutions

Expert Solution

Let ytm for semi-annual period be r,

2,766.44 = 1,000/(1 + r) + 2,000/(1 + r)2

r = 5.00%

Yield to Maturity = 10.00%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Bond 2 is a zero coupon bond with a $1000 maturity value, and n = 6...
Bond 2 is a zero coupon bond with a $1000 maturity value, and n = 6 years ; YTM= 4%. (pays no coupons); only a $1,000 maturity payment at maturity).For the Zero Coupon Bond 2 above that has a $1,000 maturity value and 6 years to maturity, what will be your annual compound yield for your 6-year holding period if you hold the bond to maturity, receiving the $1000 maturity value at the end of Year 6? Annual Compound Yield...
The current price of a 6-month zero coupon bond with a face value of $100 is...
The current price of a 6-month zero coupon bond with a face value of $100 is B1. If a 9-month strip with a face value of $100 is currently trading for B2, find the forward interest rate for the 6 to 9 month period. Solve by both continuous compounding and quarterly compounding. Write your answers for the following: 10. Six-month spot interest rate for quarterly compounding. 11. Nine-month spot interest rate for quarterly compounding. 12. Forward rate (6 to 9...
The current price of a 6-month zero coupon bond with a face value of $100 is...
The current price of a 6-month zero coupon bond with a face value of $100 is B1. If a 9-month strip with a face value of $100 is currently trading for B2, find the forward interest rate for the 6 to 9 month period. Solve by both continuous compounding and quarterly compounding. Write your answers for the following: 14. Nine-month spot interest rate for continuous compounding. 15. Forward rate (6 to 9 months) for continuous compounding. 16. What is the...
An investor wants to buy a zero-coupon bond with face value $100, maturity date is 12...
An investor wants to buy a zero-coupon bond with face value $100, maturity date is 12 months (1 Year), market price is $50 and the annual inflation rate is 5%. What is the nominal zero-coupon bonds yield to maturity? What is the real bond price?
You find a zero coupon bond with a par value of $10,000 and 20 years to maturity. The yield to maturity on this bond is...
You find a zero coupon bond with a par value of $10,000 and 20 years to maturity. The yield to maturity on this bond is 4.2 percent. Assume semiannual compounding periods. What is the price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000....
A zero-coupon bond has a yield to maturity of 9% and a par value of $1,000. By convention, zero bonds are assumed to pay $0 semi-annually. If the bond matures in eight years, the bond should sell for a price of _______ today.v.
Portfolio A consists of a 2-year zero-coupon bond with a face value of $8,000 and a...
Portfolio A consists of a 2-year zero-coupon bond with a face value of $8,000 and a 10-year zero-coupon bond with a face value of $2,000. The current yield on all bonds is 11.75% per annum. (Answer with two decimal digits accuracy) The duration of portfolio A is
A zero-coupon bond with $1000 face value has 10-year to maturity. If this bond is currently...
A zero-coupon bond with $1000 face value has 10-year to maturity. If this bond is currently trading at $463.20. What is this bond’s YTM (i.e., required rate of return)? What is the coupon rate for a bond with three years until maturity, a price of $953.46, and a yield to maturity of 6%? Assume the bond’s face value is $1,000. Kodak has a bond with 10 year until maturity, a coupon rate of 10%, and selling for $1,200. This bond...
URGENT!! You plan to form a portfolio by investing in a 6-year zero-coupon bond and a...
URGENT!! You plan to form a portfolio by investing in a 6-year zero-coupon bond and a 3-year 6% annual coupon bond with a yield to maturity of 11%. The target duration of this portfolio is 5 years. Therefore, ________ of the portfolio value should be allocated to the zero-coupon bond. A) 68.55% B) 31.45% C) 83.33% D) 24%
​Zero-coupon bond. Wesley Company will issue a zero-coupon bond this coming month. The projected bond yield...
​Zero-coupon bond. Wesley Company will issue a zero-coupon bond this coming month. The projected bond yield is 10%. If the par value is ​$5,000​, what is the​ bond's price using a semiannual convention if a. the maturity is 15 ​years? b. the maturity is 35 ​years? c. the maturity is 50 ​years? d. the maturity is 100 ​years?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT