Homework Answers
Question 6:
a. PV is calculated using =PV(rate,nper,pmt,fv) in excel =PV(0.05,10,50,1000) = $1,000
b. PV =PV(0.07,10,50,1000) = $859.53
c. PV =PV(0.03,10,50,1000) = $1,170.60
This shows us that there is an inverse relationship between the yield to maturity and the bond price. As we see in #6 above, as the YTM increases above the coupon rate, the bond trades at a discount and as the YTM decreases below the coupon rate, the bond trades at a premium
Note: We have answered one question (#6) with all sub-parts (a,b and c). Please post #7 separately for experts to answer since only one full question can be answered at a time.
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6a.) TTM: 10 years. YTM: 5%. C: 5%. PV:? 6b.) TTM: 10 years. YTM: 7%. C:...
4a.) TTM: 10 years. YIM: 6%. C: 3%. PV:? 4b.) TTM: 10 years. YTM: 8%. C:...
4a.) TTM: 10 years. YIM: 6%. C: 3%. PV:? 4b.) TTM: 10 years. YTM: 8%. C: 3%. PV: ? 4c.) TTM: 10 years. YTM: 4%. C: 3%. PV:? 5a.) TTM: 10 years. YTM: 6%. C: 9%. PV: ? 5b.) TTM: 10 years. YTM: 8%. C: 9%. PV: ? 5c.) TTM: 10 years. YTM: 4% C: 9% PV: ? Questions for Problems 4-5 a) What do problems 4 and 5 tell us about the way the coupon rate affects the sensitivity...
la.) TTM: 15 years. YTM: 7%. C: 7%. PV: 2 1b.) TTM: 10 years. YTM: 7%....
la.) TTM: 15 years. YTM: 7%. C: 7%. PV: 2 1b.) TTM: 10 years. YTM: 7%. C: 7%. PV:? Ic.) TTM:5 years. YTM: 7%. C: 7%. PV:? 2a.) TTM: 15 years. YTM: 9% C: 7%. PV:? 2b.) TTM: 10 years. YTM: 9%. C: 7%. PV:7 2c.) TTM: 5 years. YTM: 9%. C: 7%. PV: ? 3a.) TTM: 15 years. YTM: 5%. C: 7%. PV:7 3b.) TTM: 10 years. YTM: 5%. C: 7%. PV: ? 3c.) TTM: 5 years. YTM: 5%....
Iv.) 8a.) TTM: 2 years YTM: 8% C: 7% 8b.) TTM: 25 years YTM: 8% C:7%...
Iv.) 8a.) TTM: 2 years YTM: 8% C: 7% 8b.) TTM: 25 years YTM: 8% C:7% Question for Problem 8. How much does the price change if the yield to maturity, for each bond, increases one basis point? V.) Try This. 9a.) TTM: 2 years YTM: 8% C: 7% 9b.) TTM: 25 years YTM: 8% C: 7% Question for Problem 9, How much does the yield to maturity change, for each bond, if the price increases by 1/32 ofa percentage...
VI.) 10a.) TTM: 3 years YTM: 7% C:5% PV: ? 10b.) TTM: 30 years YTM: 7%...
VI.) 10a.) TTM: 3 years YTM: 7% C:5% PV: ? 10b.) TTM: 30 years YTM: 7% C:5% PV: ? Questions for Problem 10. a.) Find the price of each bond, including the annuity and lump sum amounts b.) Change the yield of each bond by minus 25 basis points. Find the new prices, including the annuity and lump sum components bond?
1. Bond A sells at a premium, so the YTM must be less than the coupon...
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year...
The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year zeros is 6%. The yield to maturity on 2-year- maturity coupon bonds with coupon rates of 9% (paid annually) is 5.9%. a. What arbitrage opportunity is available for an investment banking firm? The arbitrage strategy is to buy zeros with face values of $ D and $C , and respective maturities of one year and two years. b. What is the profit on the...
a. A 6% coupon bond paying interest annually has a modified duration of 7 years, sells...
a. A 6% coupon bond paying interest annually has a modified duration of 7 years, sells for $820, and is priced at a yield to maturity of 9%. If the YTM decreases to 8%, what is the predicted change in price ($) using the duration concept? (2 marks) b. A bond with annual coupon payments has a coupon rate of 6%, yield to maturity of 7 % , and Macaulay duration of 12 years. What is the bond's modified duration?...
Problem 7-10 Current yield, capital gains yield, and yield to maturity Pelzer Printing Inc. has bonds...
Problem 7-10 Current yield, capital gains yield, and yield to maturity Pelzer Printing Inc. has bonds outstanding with 24 years left to maturity. The bonds have an 12% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $920.70. The capital gains yield last year was -7.93%. a. What is the yield to maturity? Round your answer to two decimal places....
Face Value you can choose your own 21. The current price of a zero-coupon bond with a YTM of 7% and 10 years to maturit...
Face Value you can choose your own
21. The current price of a zero-coupon bond with a YTM of 7% and 10 years to maturity is: a) $499 b) $508 c) $614 d) $1082 22. If the coupon rate on a bond is 8%, and the current yield is 996, then this bonds price is: a) $780 b) $800 c) $888 d) $1012 60 23. The current price of a constant growth stock with Do-$5, R-12% and g-796 is: a)...
6a. XYZ's Series A bond has 10 years to maturity and currently sells for $1280. The...
6a. XYZ's Series A bond has 10 years to maturity and currently sells for $1280. The coupon rate is 6%. Calculate its yield-to-maturity. (9 pt.) 6b. From the stock report below, answer the following questions Symbol 1. SPY 2. XLF 3. BAC 4. IWM 5. EEM 6. QQQ 7. FAS 8. S 9. MSFT 10. F Shares 46,293, 246 35,819,312 19.701,657 13,535,046 11,722,239 10,939,671 8,336 264 7,342,896 7,309,489 6.702,661 Last 123.02 13.03 6.48 71.48 39.65 57.02 13.43 2.71 26.84 12.43...
4a.) TTM: 10 years. YIM: 6%. C: 3%. PV:? 4b.) TTM: 10 years. YTM: 8%. C: 3%. PV: ? 4c.) TTM: 10 years. YTM: 4%. C: 3%. PV:? 5a.) TTM: 10 years. YTM: 6%. C: 9%. PV: ? 5b.) TTM: 10 years. YTM: 8%. C: 9%. PV: ? 5c.) TTM: 10 years. YTM: 4% C: 9% PV: ? Questions for Problems 4-5 a) What do problems 4 and 5 tell us about the way the coupon rate affects the sensitivity...
la.) TTM: 15 years. YTM: 7%. C: 7%. PV: 2 1b.) TTM: 10 years. YTM: 7%. C: 7%. PV:? Ic.) TTM:5 years. YTM: 7%. C: 7%. PV:? 2a.) TTM: 15 years. YTM: 9% C: 7%. PV:? 2b.) TTM: 10 years. YTM: 9%. C: 7%. PV:7 2c.) TTM: 5 years. YTM: 9%. C: 7%. PV: ? 3a.) TTM: 15 years. YTM: 5%. C: 7%. PV:7 3b.) TTM: 10 years. YTM: 5%. C: 7%. PV: ? 3c.) TTM: 5 years. YTM: 5%....
Iv.) 8a.) TTM: 2 years YTM: 8% C: 7% 8b.) TTM: 25 years YTM: 8% C:7% Question for Problem 8. How much does the price change if the yield to maturity, for each bond, increases one basis point? V.) Try This. 9a.) TTM: 2 years YTM: 8% C: 7% 9b.) TTM: 25 years YTM: 8% C: 7% Question for Problem 9, How much does the yield to maturity change, for each bond, if the price increases by 1/32 ofa percentage...
VI.) 10a.) TTM: 3 years YTM: 7% C:5% PV: ? 10b.) TTM: 30 years YTM: 7% C:5% PV: ? Questions for Problem 10. a.) Find the price of each bond, including the annuity and lump sum amounts b.) Change the yield of each bond by minus 25 basis points. Find the new prices, including the annuity and lump sum components bond?
1. Bond A sells at a premium, so the YTM must be less than the coupon rate. Assume the required rate of return remains constant when we're trying to determine the likelihood of a call being made. If the YTM stays less than the 9% coupon rate, then 5 years from now when the call protection ends, the bond issuer will call the bond, pay the call premium, and refinance with new bonds at lower market rates. Thus, the market...
The yield to maturity (YTM) on 1-year zero-coupon bonds is 5% and the YTM on 2-year zeros is 6%. The yield to maturity on 2-year- maturity coupon bonds with coupon rates of 9% (paid annually) is 5.9%. a. What arbitrage opportunity is available for an investment banking firm? The arbitrage strategy is to buy zeros with face values of $ D and $C , and respective maturities of one year and two years. b. What is the profit on the...
a. A 6% coupon bond paying interest annually has a modified duration of 7 years, sells for $820, and is priced at a yield to maturity of 9%. If the YTM decreases to 8%, what is the predicted change in price ($) using the duration concept? (2 marks) b. A bond with annual coupon payments has a coupon rate of 6%, yield to maturity of 7 % , and Macaulay duration of 12 years. What is the bond's modified duration?...
Problem 7-10 Current yield, capital gains yield, and yield to maturity Pelzer Printing Inc. has bonds outstanding with 24 years left to maturity. The bonds have an 12% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $920.70. The capital gains yield last year was -7.93%. a. What is the yield to maturity? Round your answer to two decimal places....
Face Value you can choose your own
21. The current price of a zero-coupon bond with a YTM of 7% and 10 years to maturity is: a) $499 b) $508 c) $614 d) $1082 22. If the coupon rate on a bond is 8%, and the current yield is 996, then this bonds price is: a) $780 b) $800 c) $888 d) $1012 60 23. The current price of a constant growth stock with Do-$5, R-12% and g-796 is: a)...
6a. XYZ's Series A bond has 10 years to maturity and currently sells for $1280. The coupon rate is 6%. Calculate its yield-to-maturity. (9 pt.) 6b. From the stock report below, answer the following questions Symbol 1. SPY 2. XLF 3. BAC 4. IWM 5. EEM 6. QQQ 7. FAS 8. S 9. MSFT 10. F Shares 46,293, 246 35,819,312 19.701,657 13,535,046 11,722,239 10,939,671 8,336 264 7,342,896 7,309,489 6.702,661 Last 123.02 13.03 6.48 71.48 39.65 57.02 13.43 2.71 26.84 12.43...
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