Homework Answers
a)
Hence, Bond price is $898.75
b)
Hence, Bond price is $634.86
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Consider two bonds, a 3-year bond paying an annual coupon of 5%, and a 20-year bond,...
Consider two bonds, a 3-year bond paying an annual coupon of 8%, and a 20- year...
Consider two bonds, a 3-year bond paying an annual coupon of 8%, and a 20- year bond, also with an annual coupon of 8%. Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 11%. a. What is the new price of the 3-year bond? (Round your answer to 2 decimal places.) Price of the 3-year bond b. What is the new price of the 20-year...
Consider two bonds, a 3-year bond paying an annual coupon of 6.30% and a 10-year bond...
Consider two bonds, a 3-year bond paying an annual coupon of 6.30% and a 10-year bond also with an annual coupon of 6.30%. Both currently sell at a face value of $1,000. Now suppose interest rates rise to 9%. a. What is the new price of the 3-year bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Bond price b. What is the new price of the 10-year bonds? (Do not round intermediate calculations. Round your...
Consider three bonds with 5.80% coupon rates, all making annual coupon payments and all selling at...
Consider three bonds with 5.80% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years, a. What will be the price of the 4-year bond if its yield increases to 6.80%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the price...
Coupon rates. What are the coupon rates for the following bonds? Yield to Coupon Years to Coupon Frequency Par Value Maturity Maturity Price Rate $5,000.00 20 $3,925.15 monthly 1,000.00 5% $1,000.00...
Coupon rates. What are the coupon rates for the following bonds? Yield to Coupon Years to Coupon Frequency Par Value Maturity Maturity Price Rate $5,000.00 20 $3,925.15 monthly 1,000.00 5% $1,000.00 semiannual $1,000.00 9% $1,038.90 annual $1,000.00 11% $677.87 20 quarterly Hint: Make sure to round all intermediate calculations to at least six decimal places a. What is the coupon rate for the following bond? (Round to two decimal places.) Yield to Maturity Coupon Years to Coupon Frequency Par Value...
A 20-year maturity, 6.5% coupon bond paying coupons semiannually is callable in five years at a...
A 20-year maturity, 6.5% coupon bond paying coupons semiannually is callable in five years at a call price of $1,010. The bond currently sells at a yield to maturity of 6% (3% per half-year). a. What is the yield to call annually? (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. What is the yield to call annually if the call price is only $960? (Do not round intermediate calculations. Round your answer to 3 decimal...
1. Consider a bond paying a coupon rate of 12.25% per year semiannually when the market...
1. Consider a bond paying a coupon rate of 12.25% per year semiannually when the market interest rate is only 4.9% per half-year. The bond has six years until maturity. a. Find the bond's price today and twelve months from now after the next coupon is paid. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is the total rate of return on the bond? (Do not round intermediate calculations. Round your answer to 2...
Consider three bonds with 5.60% coupon rates, all making annual coupon payments and all selling at...
Consider three bonds with 5.60% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 6.60%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the price...
The yield to maturity on 1-year zero-coupon bonds is currently 4.5%; the YTM on 2-year zeros...
The yield to maturity on 1-year zero-coupon bonds is currently 4.5%; the YTM on 2-year zeros is 5.5%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 6% The face value of the bond is $100. a. At what price will the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. What will the yield to maturity on the bond be? (Do...
A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a...
A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1,100. The bond currently sells at a yield to maturity of 7% (3.5% per half-year). a. What is the yield to call annually? (Do not round Intermediate calculations. Round your answer to 3 decimal places.) Meld to call 010144 b. What is the yield to call annually if the call price is only $1,050? (Do not round Intermediate calculations. Round your...
Treasury bonds paying an 10.0% coupon rate with semiannual payments currently sell at par value. What...
Treasury bonds paying an 10.0% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have to pay in order to sell at par if they paid their coupons annually? (Hint: What is the effective annual yield on the bond?) (Round your answer to 2 decimal places.) Effective annual yield
Consider two bonds, a 3-year bond paying an annual coupon of 8%, and a 20- year bond, also with an annual coupon of 8%. Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 11%. a. What is the new price of the 3-year bond? (Round your answer to 2 decimal places.) Price of the 3-year bond b. What is the new price of the 20-year...
Consider two bonds, a 3-year bond paying an annual coupon of 6.30% and a 10-year bond also with an annual coupon of 6.30%. Both currently sell at a face value of $1,000. Now suppose interest rates rise to 9%. a. What is the new price of the 3-year bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Bond price b. What is the new price of the 10-year bonds? (Do not round intermediate calculations. Round your...
Consider three bonds with 5.80% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years, a. What will be the price of the 4-year bond if its yield increases to 6.80%? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the price...
Coupon rates. What are the coupon rates for the following bonds? Yield to Coupon Years to Coupon Frequency Par Value Maturity Maturity Price Rate $5,000.00 20 $3,925.15 monthly 1,000.00 5% $1,000.00 semiannual $1,000.00 9% $1,038.90 annual $1,000.00 11% $677.87 20 quarterly Hint: Make sure to round all intermediate calculations to at least six decimal places a. What is the coupon rate for the following bond? (Round to two decimal places.) Yield to Maturity Coupon Years to Coupon Frequency Par Value...
The yield to maturity on 1-year zero-coupon bonds is currently 4.5%; the YTM on 2-year zeros is 5.5%. The Treasury plans to issue a 2-year maturity coupon bond, paying coupons once per year with a coupon rate of 6% The face value of the bond is $100. a. At what price will the bond sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. What will the yield to maturity on the bond be? (Do...
A 30-year maturity, 8% coupon bond paying coupons semiannually is callable in five years at a call price of $1,100. The bond currently sells at a yield to maturity of 7% (3.5% per half-year). a. What is the yield to call annually? (Do not round Intermediate calculations. Round your answer to 3 decimal places.) Meld to call 010144 b. What is the yield to call annually if the call price is only $1,050? (Do not round Intermediate calculations. Round your...
Treasury bonds paying an 10.0% coupon rate with semiannual payments currently sell at par value. What coupon rate would they have to pay in order to sell at par if they paid their coupons annually? (Hint: What is the effective annual yield on the bond?) (Round your answer to 2 decimal places.) Effective annual yield
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