Question

Question 1

A bond has 23 year to maturity and a coupon rate of 7%. Coupons are paid semi-annually. If the YTM of the bond is 10%, what is the price of the bond today?

Round your answer to dollars and cents, for example 100.12.

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Question 2

Today you purchase a 9-year bond at a YTM of 11%. The bond pays coupons annually and has a coupon rate of 9%. What is your 1-year rate of return if you sell the bond 1-year from now at a YTM of 11%.

Input your answer in decimals, not percent. Answer to 4 decimal places, for example 0.1234.

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Question 3

On the way to campus in the morning, you purchased a 10-year, 11% coupon bond with a YTM of 11%. Later in the day, you sold the bond at a YTM of 12%. What is your 1-day rate of return on this bond investment?

Input your answer in decimals, not percent. Answer to 4 decimal places, for example 0.1234.

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Question 4

One year ago, you purchased a 6-year, 8% coupon bond at a YTM of 8%. Today (one year later) you sold the bond at a YTM of 9%.

What was your percentage capital gain on this investment?

Input your answer in decimals, not percent. Answer to 4 decimal places, for example 0.1234.

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Question 5

You purchase a 1-year, 3% coupon TIPS when rates are 11%. Over the year, inflation is 3%. You keep the bond until it matures in 1-year.

What is your 1-year rate of return on this investment (the nominal rate of return)? Answer in decimals, not percent, and round to 4 decimals. For example 0.1234.

Answer 1

Price of the bond at 10% present value of coupon payments + present value of face value PMT*(1-(1/(1+rn)))/r(face value/(1+r)An - $731.80 35 * (1-(1/(1.05446)))/0.05+(1000/1.05A46)