Question

I am having trouble answering questions 11 and 12. please help

Chapter 2 Pricing of Bonds 33 R. Calculate for each of the following bonds price of this debt obligation today is $90,000. What are some reasons why the price of this debt obligation could have declined since you purchased it three years ago? the price per $1,000 of par value assuming semiannual coupon payments. Coupon Rate (%) Years to Maturity Required Yield (%) Bond 11. Suppose that you are reviewing a price sheet for 20 15 14 bonds and see the following prices (per $100 par value) reported. You observe what seem to be several errors. Without calculating the price of each bond, indicate which bonds seem to be reported incorrectly and explain why. 10 9. Consider a bond selling at par ($100) with a Coupon Rate (%) 6 Required Yield (%) coupon rate of6% and 10 years to maturity. a. What is the price of this bond if the required yield is 15%? b. What is the price of this bond if the required yield increases from 15% to 16%, and by what percentage did the price of this bond change? c. What is the price of this bond if the required yield is 5%? d. What is the price of this bond if the required 12. What is the maximum price of a bond? yield increases from 5% to 6%, and by what percentage did the price of this bond change? e. From your answers to Question 9, parts b and d, what can you say about the relative price volatility of a bond in high-compared with low 15. Explain why you agree or disagree with the interest-rate environments? Bond Price 90 110 105 X 0 100 What is the "dirty" price of a bond? Explain why you agree or disagree with the following statement: "The price of a floater will always trade at its par value." 13. 14. following statement: "The price of an inverse floater will increase when the reference rate decreases." 10. Suppose that you purchased a debt obligation three years ago at its par value of $100,000 and nine years remaining to maturity. The market

Answer 1