Answer:
Expected Return (ER) of bond = R1*P1+R2*P2+..............+Rn*Pn
Where R= Expected Return
P= Probability of Return
ER = $1050*0.99+$0*0.01
ER = $1039.5
You buy a bond for $1,000 today that promises interest of $50 in one year plus...
Question 2 3.75 pts You buy a bond for $1000 today that promises interest of $100 in one year plus the return of your principal. However, the probability that the company will default and not pay you either interest nor repay your principal is 5 percent. The expected return on the bond ispercent. O 4.95 O 4.50 O 5.50 O 3.95
A zero-coupon bond with a market-beta of 0.2 promises to pay $1,000 in the first year. However, it may default and pay nothing with probability 0.1%. If the risk-free rate is 5.3%, the equity premium is 6.5%, and the CAPM is correct, what would be the bond price today?________________ Carry out calculations to at least 4 decimal places. Enter percentages as whole numbers. Example: 3.03% should be entered as 3.03. Do not include commas or dollar signs in numerical answers.
I only need part (c) and if possible the questions after it Suppose you are thinking of investing on a Corporate bond that has a potential to go into default. It promises to pay $80.00 at the end of every year for 4 years as well as pay the face value of $1,000 at the end of the 4h year. Today is the 1 day of year 1 a) (s points): What is the coupon rate of this bond? b)...
A bond promises to pay $100 in one year. a. What is the interest rate on the bond if its price today is $75? $85? $95? b. What is the relation between the price of the bond and the interest rate? c. If the interest rate is 8%, what is the price of the bond today?
4. You bought a callable bond at the face value two years ago. The bond has a four- year maturity, a 10 percent annual coupon, a $1,000 face value, and a $1,021 call price. Suppose the bond is called immediately after you have received the second coupon payment. What is the bond's yield to call? A) 10% B) 11% C) 12% D) 14% 5. A corporate bond matures in one year. The bond promises a $50 coupon and principal of...
Elif owns a bond that will pay her $75 each year in interest plus a $1,000 principal payment at maturity. What is the $75 called? What is the $1,00 called? What other information would Elif need to calculate the value of this bond? (Please Show Work, Thank You So Much in Advance!)
You buy a bond with a $1,000 par value today for a price of $900. The bond has five years to maturity and makes annual coupon payments of $80 per year. You hold the bond to maturity, but you do not reinvest any of your coupons. What was your realized compound return over the holding period?
Question 8 1 pts You buy an ordinary annuity today for $121,330, which promises to pay you $10,536 per year. If the interest rate is 5.82 percent, for how many years will you receive payments? Answer to 4 decimals.
Question 8 1 pts You buy an ordinary annuity today for $127.791, which promises to pay you $13,753 per year. If the interest rate is 7.25 percent, for how many years will you receive payments? Answer to 4 decimals. 15.9991
You have just purchased a newly issued municipal bond for $1,000. The bond pays $50 to its holder at the end of the the first, second, and third years and pays $1,050 upon its maturity at the end of the following year. a. What are the principal amount, the term, the coupon rate, and the coupon payment for your bond? Instructions: Enter your responses as whole numbers. Principal amount: $ Term: years Coupon rate: % Coupon payment: $ ...