Homework Answers
Hi
The basic principle of the bond is that the price increases if there is a decrease in the Yield of the bond.
As observed from the chart,
Bond Price at 4% = $1,815.42
Bond Price at 2% = $2,308.11
If bonds were purchased at 4% i.e. $1,815.42 and sold when the interest rate was 2% i.e $2,308.11, return on investment on sale of bond will be
Return = $2,308.11 - $1,815.42 = $492.69
Return on investment = $492.69 / $1,815.42 = 27.14%
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Table 10-1 Bond price table (10% Interest Payment, 20 Years to Maturity) Yield to Maturity PV...
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years....
Refer to Table 10-1, which is based on bonds paying 10 percent
interest for 20 years. Assume interest rates in the market (yield
to maturity) decrease from 10 to 9 percent.
a. What is the bond price at 10 percent?
Bond price =
What is the bond price at 9 percent?
Bond price =
c. What would be your percentage return on the
investment if you bought when rates were 10 percent and sold when
rates were 9 percent?...
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years....
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 16 percent to 9 percent. a. What is the bond price at 16 percent? Bond price b. What is the bond price at 9 percent? Bond price c. What would be your percentage return on investment if you bought when rates were 16 percent and sold when rates were 9 percent? (Do not...
Refer to Table 10-1, assume interest rates in the market (yield to maturity) are 9 percent...
Refer to Table 10-1, assume interest rates in the market (yield to maturity) are 9 percent for 20 years on a bond paying 10 percent a. What is the price of the bond? Bond price b. Assume 15 years have passed and interest rates in the market have gone up to 12 percent. Now, using Table 10-2 for 5 years, what is the price of the bond? Bond price nces c. What would your percentage return be if you bought...
Table 10-2 Impact of time to maturity on bond prices Time Period in Years to Maturity...
Table 10-2 Impact of time to maturity on bond prices Time Period in Years to Maturity (10% Interest Payment, Various Times to Maturity) Bond Price with 8% Bond Price with 12% Yield to Maturity Yield to Maturity $1,000.00 1,018.52 1,079.85 1,134.20 1,171.19 1,196.36 1,213.50 1,225.16 $1,000.00 982.14 927.90 887.00 863.78 850.61 843.14 838.90 Refer to Table 10-2 a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column...
I only need help with part c! Refer to Table 10-1, which is based on bonds...
I only need help with part c!
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 12 percent to 11 percent. a. What is the bond price at 12 percent? Bond price 850.61 b. What is the bond price at 11 percent? Bond price 920.37 c. What would be your percentage return on investment if you bought when rates were 12 percent...
4. What is the yield to maturity (YTM) of a 20-yr. bond w/ a coupon rate of 10%/yr., has a $1K par value, and is cu...
4. What is the yield to maturity (YTM) of a 20-yr. bond w/ a coupon rate of 10%/yr., has a $1K par value, and is currently priced at $1196.36? Round your answer to the nearest whole percent. Coupons are paid annually. Calculate the YTM if the price is $850.61. Finally, calculate YTM if the price is $1000.00.
Go to Table 10-1 which is based on bonds paying 10 percent interest for 20 years
Go to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 11 percent to 8 percent: A. What is the bond price at 11%? B. What is the bond price at 8%? C. What would be your percentage return on investment if you bought when rates were 11% and sold when rates were 8%? Table 10-1 Bond price table (10% Interest Payment, 20Yrs to...
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years....
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 12 percent to 6 percent. a. What is the bond price at 12 percent? Bond price b. What is the bond price at 6 percent? Bond price c. What would be your percentage return on investment if you bought when rates were 12 percent and sold when rates were 6 percent? (Do not...
A $1,000 par value bond with Seven years left to maturity pays an interest payment semiannually...
A $1,000 par value bond with Seven years left to maturity pays an interest payment semiannually with a 10 percent coupon rate and is priced to have a 9 percent yield to maturity. If interest rates surprisingly increase by 0.5 percent, by how much would the bond's price change? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g. 32.16)) Bond's nce creased by 197
A Sunfish bond is paying 10 percent interest for 20 years on a semiannual basis. Assume interest rates in the market (yield to maturity) decline from 12 percent to 8 percent: (Use a Financial calculator to arrive at the answers. Do not round intermediate
A Sunfish bond is paying 10 percent interest for 20 years on a semiannual basis. Assume interest rates in the market (yield to maturity) decline from 12 percent to 8 percent: (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is the bond price at 12 percent? Bond price $ b. What is the bond price at 8 percent? Bond price ...
Refer to Table 10-1, which is based on bonds paying 10 percent
interest for 20 years. Assume interest rates in the market (yield
to maturity) decrease from 10 to 9 percent.
a. What is the bond price at 10 percent?
Bond price =
What is the bond price at 9 percent?
Bond price =
c. What would be your percentage return on the
investment if you bought when rates were 10 percent and sold when
rates were 9 percent?...
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 16 percent to 9 percent. a. What is the bond price at 16 percent? Bond price b. What is the bond price at 9 percent? Bond price c. What would be your percentage return on investment if you bought when rates were 16 percent and sold when rates were 9 percent? (Do not...
Refer to Table 10-1, assume interest rates in the market (yield to maturity) are 9 percent for 20 years on a bond paying 10 percent a. What is the price of the bond? Bond price b. Assume 15 years have passed and interest rates in the market have gone up to 12 percent. Now, using Table 10-2 for 5 years, what is the price of the bond? Bond price nces c. What would your percentage return be if you bought...
Table 10-2 Impact of time to maturity on bond prices Time Period in Years to Maturity (10% Interest Payment, Various Times to Maturity) Bond Price with 8% Bond Price with 12% Yield to Maturity Yield to Maturity $1,000.00 1,018.52 1,079.85 1,134.20 1,171.19 1,196.36 1,213.50 1,225.16 $1,000.00 982.14 927.90 887.00 863.78 850.61 843.14 838.90 Refer to Table 10-2 a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column...
I only need help with part c!
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 12 percent to 11 percent. a. What is the bond price at 12 percent? Bond price 850.61 b. What is the bond price at 11 percent? Bond price 920.37 c. What would be your percentage return on investment if you bought when rates were 12 percent...
4. What is the yield to maturity (YTM) of a 20-yr. bond w/ a coupon rate of 10%/yr., has a $1K par value, and is currently priced at $1196.36? Round your answer to the nearest whole percent. Coupons are paid annually. Calculate the YTM if the price is $850.61. Finally, calculate YTM if the price is $1000.00.
Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 12 percent to 6 percent. a. What is the bond price at 12 percent? Bond price b. What is the bond price at 6 percent? Bond price c. What would be your percentage return on investment if you bought when rates were 12 percent and sold when rates were 6 percent? (Do not...
A $1,000 par value bond with Seven years left to maturity pays an interest payment semiannually with a 10 percent coupon rate and is priced to have a 9 percent yield to maturity. If interest rates surprisingly increase by 0.5 percent, by how much would the bond's price change? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g. 32.16)) Bond's nce creased by 197
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