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Problem 6-23 Real Returns (LO3) Suppose that you buy a TIPS (inflation-indexed) bond with a 1-year...
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of...
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 5.3% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9.95% in each year. a. What will be your cash flow in year 1? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cash flow T b. What will be your cash flow in year 2? (Do not round intermediate calculations. Round...
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of...
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 4.7% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9.05% in each year. a. What will be your cash flow in year 1? b. What will be your cash flow in year 2? B.
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1....
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
Suppose that you buy a 1-year maturity bond with a coupon of 8.8% paid annually. If...
Suppose that you buy a 1-year maturity bond with a coupon of 8.8% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 10.70%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Real Rate of Return 4% ----> ?% 6% ---> ?% 10.70% ----> ?%
Checl Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer...
Checl Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer a yield of 29%. However, there is a 50% chance that Casino will default and bondholders will receive nothing. What is the expected yield on the bonds? Assume these are zero coupon bonds with annual compounding. (Input the amount as a positive value and as a percent rounded to 1 decimal place.) of < Prev 100123 喆 Ney, >
Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago...
Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $907. The bond sells for $946 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations...
Problem 6-21 Rate of Return (LO3) A bond has a face value of $1,000, a coupon...
Problem 6-21 Rate of Return (LO3) A bond has a face value of $1,000, a coupon of 4% paid annually, a maturity of 39 years, and a yield to maturity of 7%. What rate of return will be earned by an investor who purchases the bond for $602.05 and holds it for 1 year if the bond's yield to maturity at the end of the year is 9%? (Do not round intermediate calculations. Enter your answer as a percent rounded...
33 Suppose you bought a bond with an annual coupon rate of 79 percent one year...
33 Suppose you bought a bond with an annual coupon rate of 79 percent one year ago for $902. The bond sells for $936 today a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate...
You buy a bond for $997 that has a coupon rate of 6.30% and a maturity...
You buy a bond for $997 that has a coupon rate of 6.30% and a maturity of 6-years. A year later, the bond price is $1,192. (Assume a face value of $1,000 and annual coupon payments.) a. What is the new yield to maturity on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is your rate of return over the year? (Do not round intermediate calculations. Enter your...
Suppose you bought a bond with an annual coupon rate of 5.5 percent one year ago...
Suppose you bought a bond with an annual coupon rate of 5.5 percent one year ago for $1,017. The bond sells for $1.041 today. a. Assuming a $1.000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations...
Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a coupon of 5.3% paid annually. Assume you buy the bond at its face value of $1,000, and the inflation rate is 9.95% in each year. a. What will be your cash flow in year 1? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Cash flow T b. What will be your cash flow in year 2? (Do not round intermediate calculations. Round...
Suppose that you buy a two-year 8% bond at its face value, answer the following: a-1. What will be your total nominal return over the two years if inflation is 3% in the first year and 5% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2...
Checl Suppose that Casino Royale has issued bonds that mature in 1 year. They currently offer a yield of 29%. However, there is a 50% chance that Casino will default and bondholders will receive nothing. What is the expected yield on the bonds? Assume these are zero coupon bonds with annual compounding. (Input the amount as a positive value and as a percent rounded to 1 decimal place.) of < Prev 100123 喆 Ney, >
Suppose you bought a bond with an annual coupon rate of 8.4 percent one year ago for $907. The bond sells for $946 today. a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations...
Problem 6-21 Rate of Return (LO3) A bond has a face value of $1,000, a coupon of 4% paid annually, a maturity of 39 years, and a yield to maturity of 7%. What rate of return will be earned by an investor who purchases the bond for $602.05 and holds it for 1 year if the bond's yield to maturity at the end of the year is 9%? (Do not round intermediate calculations. Enter your answer as a percent rounded...
33 Suppose you bought a bond with an annual coupon rate of 79 percent one year ago for $902. The bond sells for $936 today a. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate...
Suppose you bought a bond with an annual coupon rate of 5.5 percent one year ago for $1,017. The bond sells for $1.041 today. a. Assuming a $1.000 face value, what was your total dollar return on this investment over the past year? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What was your total nominal rate of return on this investment over the past year? (Do not round intermediate calculations...
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