Homework Answers
The annual holding period = (Selling price/Purchase price)^(1/7) - 1
The annual holding period = (22,500/13,200)^(1/7) - 1
The annual holding period = 0.07916273714
The annual holding period = 7.916273714%
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Determine the annual holding period rate of return on a 10-year, $30,000 discount bond that you...
Please show work, thanks! Determine the annual holding period rate of return on a 10-year, $30,000...
Please show work, thanks!
Determine the annual holding period rate of return on a 10-year, $30,000 discount bond that you originally purchased for $13,200 and sold 7 years later for $22,500 TT T Arial 3 (12pt) T-5 - E MS @ 3's Path:p Words:0
Question #7: Holding Period Return (20 Points) Assume that you have a one-year investment horizon and...
Question #7: Holding Period Return (20 Points) Assume that you have a one-year investment horizon and are trying to choose among two bonds. Both have the same default risk and mature in 6 years. The first is a zero-coupon bond that pays $1000 at maturity. The second is a $1000 par value coupon bond that has a coupon rate of 6% and makes an annual coupon payment. (a) If the YTM is equal to 3.6% what is the current prices...
Spencer takes out a home improvement loan for $30,000 at an interest rate of 5.5%. How...
Spencer takes out a home improvement loan for $30,000 at an interest rate of 5.5%. How much does he owe, and what is his monthly payment if he chooses the 6- year loan payment plan? Label your answer and round to the nearest cent, if needed, Hint: Consider using the simple interest formula. Paragraph Arial T - T TT T 3 (12pt) T T. Of Meshups HTML CSS Path: p Words:0 QUESTION S How much does Spencer save if he...
Problem 7-30 Holding Period Yield [LO2] The YTM on a bond is the interest rate you...
Problem 7-30 Holding Period Yield [LO2] The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy a bond with an annual coupon of 8 percent for $1,030. The bond has 17 years to maturity. What rate of return do you expect to earn on your...
13. Sam purchased a 10 year par annual bond with a coupon rate of 4%. One...
13. Sam purchased a 10 year par annual bond with a coupon rate of 4%. One year later, YTM drops by 1%. What's Sam's holding period return? 1) 7.8% 2) 11.8% 3) 3% 4) 5% 14. You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. You want the...
you have purchased a 5-year 6% bond while is yield to maturity was a percent. 2...
you have purchased a 5-year 6% bond while is yield to maturity
was a percent. 2 years later you sold the bond while it’s yield is
10%. what is your annual holding. During this two year period
1014.52 1025.12 Question 12 (10 points) You have purchased a 5-year, 6 percent bond while it is yield to maturity was 8 percent. 2 years later you sold the bond while its yield is 10 percent. What is your annual holding period return...
1. (Holding Period Yield) A few years ago, XYZ Corp. issued a bond with a par...
1. (Holding Period Yield) A few years ago, XYZ Corp. issued a bond with a par value of $1000 and annual coupon rate of 7 percent paid SEMIANNUALLY (2 times per year). At present (time 0), the bond has 20 years to maturity. a. If the yield to maturity (YTM) on this bond is now 10 percent, what is the current price of the bond (at time 0)? In your answer, please indicate your entries: N = I/Y= FV =...
A year ago, you purchased a 5-year bond, paying fixed annual coupons at a rate 5%pa....
A year ago, you purchased a 5-year bond, paying fixed annual coupons at a rate 5%pa. At the time you purchased the bond, the yield to maturity was 5%pa. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 4%, your annual total rate of return on holding the bond for that year would have been approximately 8.1% 4.8% 7.6% 9.5% 8.6%
2 years ago, you acquired a 10-year 0% coupon, $1000 face value bond at a YTM...
2 years ago, you acquired a 10-year 0% coupon, $1000 face value bond at a YTM of 12%. Today, you sold this bond at a YTM of 8%. Calculate your annualized Horizon Yield [HY] Assuming sem-annual compounding: answer 28.7842% With a financial calculator, how do you find this? Bonds of RCY Corporation with a face value of $1000 sells for $960, mature in 5 years, and have a 7% coupon rate paid semiannually. Calculate the investor's RCY by assuming the...
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000....
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000. Today (with 9 years to maturity) the bond is priced to yield 7.70%. If the bond is sold, what is the total return to the investor (interest plus appreciation) for the 1-year holding period? Hint: The total return includes the coupon rate plus the appreciation (or depreciation) due to the change in rates. Therefore, calculate the current price based on the yield, and then...
Please show work, thanks!
Determine the annual holding period rate of return on a 10-year, $30,000 discount bond that you originally purchased for $13,200 and sold 7 years later for $22,500 TT T Arial 3 (12pt) T-5 - E MS @ 3's Path:p Words:0
Question #7: Holding Period Return (20 Points) Assume that you have a one-year investment horizon and are trying to choose among two bonds. Both have the same default risk and mature in 6 years. The first is a zero-coupon bond that pays $1000 at maturity. The second is a $1000 par value coupon bond that has a coupon rate of 6% and makes an annual coupon payment. (a) If the YTM is equal to 3.6% what is the current prices...
Spencer takes out a home improvement loan for $30,000 at an interest rate of 5.5%. How much does he owe, and what is his monthly payment if he chooses the 6- year loan payment plan? Label your answer and round to the nearest cent, if needed, Hint: Consider using the simple interest formula. Paragraph Arial T - T TT T 3 (12pt) T T. Of Meshups HTML CSS Path: p Words:0 QUESTION S How much does Spencer save if he...
Problem 7-30 Holding Period Yield [LO2] The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY). a. Suppose that today you buy a bond with an annual coupon of 8 percent for $1,030. The bond has 17 years to maturity. What rate of return do you expect to earn on your...
13. Sam purchased a 10 year par annual bond with a coupon rate of 4%. One year later, YTM drops by 1%. What's Sam's holding period return? 1) 7.8% 2) 11.8% 3) 3% 4) 5% 14. You invest $100 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return of 12% and a standard deviation of 10% and a treasury bill with a rate of return of 5%. You want the...
you have purchased a 5-year 6% bond while is yield to maturity
was a percent. 2 years later you sold the bond while it’s yield is
10%. what is your annual holding. During this two year period
1014.52 1025.12 Question 12 (10 points) You have purchased a 5-year, 6 percent bond while it is yield to maturity was 8 percent. 2 years later you sold the bond while its yield is 10 percent. What is your annual holding period return...
1. (Holding Period Yield) A few years ago, XYZ Corp. issued a bond with a par value of $1000 and annual coupon rate of 7 percent paid SEMIANNUALLY (2 times per year). At present (time 0), the bond has 20 years to maturity. a. If the yield to maturity (YTM) on this bond is now 10 percent, what is the current price of the bond (at time 0)? In your answer, please indicate your entries: N = I/Y= FV =...
A year ago, you purchased a 5-year bond, paying fixed annual coupons at a rate 5%pa. At the time you purchased the bond, the yield to maturity was 5%pa. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 4%, your annual total rate of return on holding the bond for that year would have been approximately 8.1% 4.8% 7.6% 9.5% 8.6%
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000. Today (with 9 years to maturity) the bond is priced to yield 7.70%. If the bond is sold, what is the total return to the investor (interest plus appreciation) for the 1-year holding period? Hint: The total return includes the coupon rate plus the appreciation (or depreciation) due to the change in rates. Therefore, calculate the current price based on the yield, and then...
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