Homework Answers
1
=1000*20%/1.13+(1000+1000*20%)/(1.13*1.12)=1125.1580278129
2
=1.055^2/1.058-1=5.2008506616257%
3
=(1.05^4/1.058)^(1/3)-1=4.73467985466545%
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19. Suppose that a bond that will mature in two years has a face value of...
Consider the following zero‐coupon yield curve developed from current yields on risk-free securities: Maturity (years) Zero-Coupon...
Consider the following zero‐coupon yield curve developed from
current yields on risk-free securities:
Maturity (years) Zero-Coupon Yield 1 2 4 5 4.80% 5.00% 5.20% 5.50% 5.80% The forward rate for year 4 (the forward rate quoted today for an investment that begins in three years and matures in four years) is closest to: 5.50% а. 1.38% b. 5.35% С. 6.40% Od. 5.97% е. Ln
Question 3 Use an Excel spreadsheet to calculate the appropriate price and yield to maturity for...
Question 3 Use an Excel spreadsheet to calculate the appropriate price and yield to maturity for the three bonds listed below: a. Bond with coupon rate of 10% and face value of $1000 that matures in 6 years. b. Bond with coupon rate of 5% and face value of $1000 that matures in 4 years C. Bond with coupon rate of 2% and face value of $1000 that matures in 2 years. Assume that the one-year, two-year, three-year, four-year, five-year,...
Consider a coupon bond with two years left to maturity. It has a face value of...
Consider a coupon bond with two years left to maturity. It has a face value of $1000 and a coupon rate of 6%. Assume that all investors believe that the first coupon, to be received one year from today, will be paid but that there is only a 60% probability that the second coupon and the principal will be paid two years from today. There is a 40% chance that the investor will receive only $700 at the end of...
A zero coupon bond has a face value of $1,000 and matures in 6 years. Investors...
A zero coupon bond has a face value of $1,000 and matures in 6 years. Investors require a(n) 7.2 % annual return on these bonds. What should be the selling price of the bond? If the nominal rate of interest is 12.21 % and the real rate of interest is 8.76 % what is the expected rate of inflation? A Ford Motor Co. coupon bond has a coupon rate of 6.75%, and pays annual coupons. The next coupon is due...
Two years ago a 10 year 10% annual coupon $1000 face value bond was purchased at...
Two years ago a 10 year 10% annual coupon $1000 face value bond was purchased at a yield of 8%. Right after purchase the interest rates went up to 12%. If this bond is sold today, what is the investor's annual return on this investment? Hint: step 1: find original purchase price of the bond. step 2: find the reinvested value of all received coupons and the sale price of the bond. step 3: compute the annual rate of return...
14, A one-year zero coupon bond yields 3.0%. The two-and three-year zero-coupon bonds yield 4.0% and 5.0% respectively. a. The forward rate for a one-year loan beginning in two years is closest t...
14, A one-year zero coupon bond yields 3.0%. The two-and three-year zero-coupon bonds yield 4.0% and 5.0% respectively. a. The forward rate for a one-year loan beginning in two years is closest to? (10 points) b. The four-year spot rate is not given above; however, the forward price for a one-year zero-coupon bond beginning in three years is known to be 0.8400. The price today of a four-year zero-coupon bond is closest to? (5 points)
14, A one-year zero coupon...
FMA Inc has issued a $1000 par value bond that matures in 14 years. The bond...
FMA Inc has issued a $1000 par value bond that matures in 14 years. The bond pays semi-annual coupons at a rate of 7.5% APR compounded semi-annually, with first coupon payment due 6-months from today. What is the bond's price if the market requires a 9.5% yield to maturity on this bond?
4. Marianna buys a $1,000 face value bond 5 years after it is issued (the original...
4. Marianna buys a $1,000 face value bond 5 years after it is issued (the original maturity period for the bond was 15 years), and she intends to keep the bond until it matures. The coupon rate for the bond is 7.5%, and the bond pays coupons every half- year. In order for Marianna to earn 12%, compounded semi-annually, the most she should pay for the bond is closest to... a) S737 b) S742 c) $746 d) $750 e) $847...
7. Mides cooperation bonds mature in 3 years and have a yield to ma of the...
7. Mides cooperation bonds mature in 3 years and have a yield to ma of the bond is 1000. The bond have a 10% coupon the What is the capital gain yield closs) on this bond? a, 9.625% b. 1.125% b. 8.5% d. 1.125% a yield to maturity of 8.5%. The par value coupon rate and pay interest on semiannual basis. 8. A ten year bond is currently selling for S1037 and has vield to maturity of 6.23%, what is...
7. Mides cooperation bonds mature in 3 years and have a yield tom of the bond...
7. Mides cooperation bonds mature in 3 years and have a yield tom of the bond is $1000. The bond have a 10% coupon Tate What is the capital gain yield (loss) on this bond? a, 9.625% b. 1,125% b. 8.5% d. 1.125% have a yield to maturity of 8.5%. The par value coupon rate and pay interest on semiannual basis. 8. A ten year bond is currently selling for $1037 and has yield to maturity of 6.23%, W coupon...
Consider the following zero‐coupon yield curve developed from
current yields on risk-free securities:
Maturity (years) Zero-Coupon Yield 1 2 4 5 4.80% 5.00% 5.20% 5.50% 5.80% The forward rate for year 4 (the forward rate quoted today for an investment that begins in three years and matures in four years) is closest to: 5.50% а. 1.38% b. 5.35% С. 6.40% Od. 5.97% е. Ln
Question 3 Use an Excel spreadsheet to calculate the appropriate price and yield to maturity for the three bonds listed below: a. Bond with coupon rate of 10% and face value of $1000 that matures in 6 years. b. Bond with coupon rate of 5% and face value of $1000 that matures in 4 years C. Bond with coupon rate of 2% and face value of $1000 that matures in 2 years. Assume that the one-year, two-year, three-year, four-year, five-year,...
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14, A one-year zero coupon...
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