Find the effective rate of the compound interest rate or investment. (Round your answer to two...
Find the effective rate of the compound interest rate or investment. (Round your answer to two decimal places.)
A $90,000 zero-coupon bond maturing in 9 years and selling now for $43,035.
Homework Answers
| Face value | 90000 | |
| Current market price | 43035 | |
| Time in years | 9 | |
| Face value= | Current Price * (1+Interest rate)^Time | |
| 90000= | 43035*(1+Interest rate)^9 | |
| 90000/43035= | (1+Interest rate)^9 | |
| 2.091321018 | (1+Interest rate)^9 | |
| 2.0913^(1/9)= | (1+Interest rate) | |
| 1.085429986 | (1+Interest rate) | |
| Interest rate | 0.08543 | |
| Interest rate | 8.54% | |
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The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.3 percent for $785. The bond has 8 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.4 percent for $895. The bond has 10 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
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The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy a 11 percent annual coupon bond for $1,130. The bond has 18 years to maturity. What rate of return do you expect to earn on your investment? (Do not round intermediate calculations. Round your answer...
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The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.1 percent for $905. The bond has 8 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.3 percent for $785. The bond has 8 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.4 percent for $895. The bond has 10 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
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