Homework Answers
Q 1
Coupon amount=1000*5% i.e.50
Price of bond = Coupon Amount *PVAF(yield,period)+Maturity amount *PVIF (yield,period)
= 50*PVAF(10%,10)+1000*PVIF(10%,10)
=$693.25
Q 12
Difference between price and par value of a zero coupon bond represent the accumulated interest over the life of the bond as the bond pay a single amount on maturity which represent interest on the amount we paid.
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"A 10-year bond pays 5% (Paid Annually) on a face value of $1,000. If similar bonds...
Three $1,000 face value, 10-year, noncallable, bonds have the same amount of risk, hence their YTMs...
Three $1,000 face value, 10-year, noncallable, bonds have the same amount of risk, hence their YTMs are equal. Bond 8 has an 8% annual coupon, Bond 10 has a 10% annual coupon, and Bond 12 has a 12% annual coupon. Bond 10 sells at par. Assuming that interest rates remain constant for the next 10 years, which of the following statements is CORRECT? a. Since the bonds have the same YTM, they should all have the same price, and since...
A 10-year bond pays 5% on a face value of $1,000. If similar bonds are currently...
A 10-year bond pays 5% on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond? (5 marks) (b) Anfield Ltd bonds are currently selling for $1.200 per S1000 par-value bond. The bonds have a 10% coupon rate and will mature in 10 years. What is the approximate yield to maturity? (5 marks) (c) Kenanga Investment Bank is evaluating an equity. Recently, Malaysia government's risk free rate is 3.5%. Calculate...
4. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in...
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A 20-year bond pays 6% annually on a face value of $1,000. If similar bonds are...
A 20-year bond pays 6% annually on a face value of $1,000. If similar bonds are currently yielding 4%, what is the market value of the bond? Use time value of money tables in Appendix B and Appendix D.
The Federal Government 2-year coupon bond has a face value of $1,000 and pays annual coupons...
The Federal Government 2-year coupon bond has a face value of $1,000 and pays annual coupons of $33. The next coupon is due in one year. Currently, the one and two-year spot rates on Federal Government zero coupon bonds are 4% and 4.5%. What is the correct price for the coupon bond at time zero immediately)? O A. $977.68 O B. $1,000.00 OC. $1,025.00 OD. $1,023.49 E. $976.17
A) What is the value of a 3-year par bond with 5% coupon paid annually? B)...
A) What is the value of a 3-year par bond with 5% coupon paid annually? B) Find the value of the bond if the YTM doubles to 10%? Is it in premium or in discount?
What is the value of a $1,000 par value six-year bond with a 6.75% coupon paid...
What is the value of a $1,000 par value six-year bond with a 6.75% coupon paid semi-annually that is priced to yield 5.95% $1,121.70 $1,033.03 $1,039.88 $986.06 Question 8 2 pts You own a three-year bond with a 4.50% coupon paid semi-annually. The bond is priced to yield 4.50%. If rates remain unchanged over the upcoming year the value of the bond will be: O Lower O Not enough information provided The same O Higher
show all work Mr. Bond is considering purchasing a bond with 10-year maturity and $1,000 face...
show all work
Mr. Bond is considering purchasing a bond with 10-year maturity and $1,000 face value. The coupon interest rate is 8% and the interest is paid annually. If Mr. Bond requires 12% yield to maturity on the investment, then, what is price of the bond ? You have just purchased a 5-year, $1,000 par value bond. The coupon rate on this bond is 12%, and the interest is paid annually. If you expect to eam a 10 percent...
Compute the duration of a bond with a face value of $1,000, a coupon rate of 7% (coupon is paid annually) and a maturity...
Compute the duration of a bond with a face value of $1,000, a coupon rate of 7% (coupon is paid annually) and a maturity of 10 years as the interest rate (or yield to maturity) on the bond changes from 2% to 12% (consider increments of 1% - so you need to compute the duration for various yields to maturity 2%, 3%, …, 12%) . What happens to duration as the interest rate increases?
You have just purchased a 10-year, $1,000 par value bond. The coupon de un annually, with...
You have just purchased a 10-year, $1,000 par value bond. The coupon de un annually, with interest being paid semiannually. If you expect to earn a 10 percent rate of return (YTM) on this bond, how much did you pay for it? $1,122.87 O $1,003,42 $1,003.42 $875.38 $950.75 $812.15 You have just purchased a 10-year, $1,000 par value bond. The coupon rate on this bond is 8 percent annually, with interest being paid semiannually. If you expect to earn a...
Three $1,000 face value, 10-year, noncallable, bonds have the same amount of risk, hence their YTMs are equal. Bond 8 has an 8% annual coupon, Bond 10 has a 10% annual coupon, and Bond 12 has a 12% annual coupon. Bond 10 sells at par. Assuming that interest rates remain constant for the next 10 years, which of the following statements is CORRECT? a. Since the bonds have the same YTM, they should all have the same price, and since...
A 10-year bond pays 5% on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond? (5 marks) (b) Anfield Ltd bonds are currently selling for $1.200 per S1000 par-value bond. The bonds have a 10% coupon rate and will mature in 10 years. What is the approximate yield to maturity? (5 marks) (c) Kenanga Investment Bank is evaluating an equity. Recently, Malaysia government's risk free rate is 3.5%. Calculate...
4. A coupon bond that pays interest semi-annually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 10%. The value of the bond today will be rate is 8% a. $1,075.80 b.$924.16 if the coupon c. $922.78 d. $1,077.20 e. none of the above 5. A zero-coupon bond has a yield to maturity of 9% and a par value of$1,000. Ifthe bond matu in 8 years, the bond should sell for a...
The Federal Government 2-year coupon bond has a face value of $1,000 and pays annual coupons of $33. The next coupon is due in one year. Currently, the one and two-year spot rates on Federal Government zero coupon bonds are 4% and 4.5%. What is the correct price for the coupon bond at time zero immediately)? O A. $977.68 O B. $1,000.00 OC. $1,025.00 OD. $1,023.49 E. $976.17
What is the value of a $1,000 par value six-year bond with a 6.75% coupon paid semi-annually that is priced to yield 5.95% $1,121.70 $1,033.03 $1,039.88 $986.06 Question 8 2 pts You own a three-year bond with a 4.50% coupon paid semi-annually. The bond is priced to yield 4.50%. If rates remain unchanged over the upcoming year the value of the bond will be: O Lower O Not enough information provided The same O Higher
show all work
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You have just purchased a 10-year, $1,000 par value bond. The coupon de un annually, with interest being paid semiannually. If you expect to earn a 10 percent rate of return (YTM) on this bond, how much did you pay for it? $1,122.87 O $1,003,42 $1,003.42 $875.38 $950.75 $812.15 You have just purchased a 10-year, $1,000 par value bond. The coupon rate on this bond is 8 percent annually, with interest being paid semiannually. If you expect to earn a...
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