Homework Answers
B is correct.
As yield fall the value of the bond increases. Higher the duration, higher the change in the bond price. In this case, you bought a bond when yield was 8% and you sold it when the yield was 7%. Hence, you are likely to have more than 8%.
Add Answer to:
Suppose you bought a bond with 5 periods to maturity at a per period yield of...
Three investors invest in the same 10-year 8% annual coupon bond. They bought the bond at...
Three investors invest in the same 10-year 8% annual coupon bond. They bought the bond at the same price ($85.503075 for a par value of $100) and at the same time. A is a buy-and-hold investor (hold till maturity), B will sell the bond after four years, and C will sell the bond after seven years. What is the yield to maturity of this bond? For each of these three investors, find the total cash flow (in dollar amount) at...
You buy a 5-year zero coupon bond with 4% yield to maturity. You sell the bond...
You buy a 5-year zero coupon bond with 4% yield to maturity. You sell the bond 2 years later when it's yield to maturity is 2%. What was your annualized holding period return?
5. Suppose you buy a Baa rated corporate bond today for $1,000 with a maturity of...
5. Suppose you buy a Baa rated corporate bond today for $1,000 with a maturity of ten years and a yield to maturity of 7%, and sell it one year from now for $1,150. Which of the following is (are) true? A. Your holding period return will be less than the yield to maturity B. Your holding period return will be equal to the yield to maturity C. Your holding period return will be greater than the yield to maturity...
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6.3%. You hold...
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6.3%. You hold the bond for five years before selling it a. If the bond's yield to maturity is 6.3% when you sell it, what is the annualized rate of return of your investment? b. If the bond's yield to maturity is 7.3% when you sell it, what is the annualized rate of return of your investment? c. If the bond's yield to maturity is 5.3% when...
Suppose you purchase a 30-year zero-coupon bond with a yield to maturity of 5.5 % You...
Suppose you purchase a 30-year zero-coupon bond with a yield to maturity of 5.5 % You hold the bond for five years before selling it.a. If the bond's yield to maturity is 5.5 % when you sell it, what is the rate of return of your investment? b. If the bond's yield to maturity is 6.5 % when you sell it, what is the rate of return of your investment? c. If the bond's yield to maturity is 4.5 %...
4. A newly-issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity...
4. A newly-issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%. Find the holding period return for a one-year investment period if the bond is selling at a yield to maturity of 7% at the end of the year. a. Find the realized compound yield for a 2-year holding period, assuming that (i) you sell the bond after 2 years, (ii) the bond yield to...
Return to question A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8%...
Return to question A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 1392 and modified duration of 11.34 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration -12.30 years--but considerably higher convexity of 272.9. 1.25 points a. Suppose the yield to maturity on both bonds increases to 9% IWhat will be the actual percentage...
A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield)...
A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 139.2 and modified duration of 11.34 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration--12.30 years--but considerably higher convexity of 272.9. a. Suppose the yield to maturity on both bonds increases to 9%. What will be the actual percentage capital loss on each bond? il...
A 13.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield)...
A 13.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 161.9 and modified duration of 12.27 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration-12.30 years-but considerabl higher convexity of 272.9 a. Suppose the yield to maturity on both bonds increases to 9%. What will be the actual percentage capital loss on each bond? What...
Q. Suppose you buy a 30-year, 7.5% (annual payment) coupon bond when its yield to maturity...
Q. Suppose you buy a 30-year, 7.5% (annual payment) coupon bond when its yield to maturity is 7.67% and you plan to hold it for 20 years. Your forecast is that the bond’s yield to maturity will be 8% when it is sold and that the reinvestment rate on the coupons will be 6% for the first 10 years and 7% for the next 10 years. a. What is the initial price of the bond when you buy it? b....
5. Suppose you buy a Baa rated corporate bond today for $1,000 with a maturity of ten years and a yield to maturity of 7%, and sell it one year from now for $1,150. Which of the following is (are) true? A. Your holding period return will be less than the yield to maturity B. Your holding period return will be equal to the yield to maturity C. Your holding period return will be greater than the yield to maturity...
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6.3%. You hold the bond for five years before selling it a. If the bond's yield to maturity is 6.3% when you sell it, what is the annualized rate of return of your investment? b. If the bond's yield to maturity is 7.3% when you sell it, what is the annualized rate of return of your investment? c. If the bond's yield to maturity is 5.3% when...
4. A newly-issued bond pays its coupons once annually. Its coupon rate is 5%, its maturity is 20 years, and its yield to maturity is 8%. Find the holding period return for a one-year investment period if the bond is selling at a yield to maturity of 7% at the end of the year. a. Find the realized compound yield for a 2-year holding period, assuming that (i) you sell the bond after 2 years, (ii) the bond yield to...
Return to question A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 1392 and modified duration of 11.34 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration -12.30 years--but considerably higher convexity of 272.9. 1.25 points a. Suppose the yield to maturity on both bonds increases to 9% IWhat will be the actual percentage...
A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 139.2 and modified duration of 11.34 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration--12.30 years--but considerably higher convexity of 272.9. a. Suppose the yield to maturity on both bonds increases to 9%. What will be the actual percentage capital loss on each bond? il...
A 13.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield) has convexity of 161.9 and modified duration of 12.27 years. A 40-year maturity 6% coupon bond making annual coupon payments also selling at a yield to maturity of 8% has nearly identical modified duration-12.30 years-but considerabl higher convexity of 272.9 a. Suppose the yield to maturity on both bonds increases to 9%. What will be the actual percentage capital loss on each bond? What...
Most questions answered within 3 hours.
-
Rubies are essentially alumina Al2O3 with a contaminant of
chromium in the form of Cr2O3. A...
asked 4 minutes ago -
Write a full program that will accept
exactly three command line arguments
that can be interpreted as...
asked 6 minutes ago -
1.histones are proteins that make up nucleosomes. they bind to
the backbone of DNA in chromosomes....
asked 15 minutes ago -
What is the relationship between a variables value and their
probabilities as it is summarized by...
asked 24 minutes ago -
Balance Sheet
DR
CR
Cash
10000
AR
7000
Supplies
500
Equipment
5,000
Accum depreciation
...
asked 22 minutes ago -
Country
Continent
GDP (millions of US$)
Afghanistan
Asia
 
asked 25 minutes ago -
1) Use the Euclidean algorithm (write in pseudocode) to find the
greatest common divisor of 8...
asked 47 minutes ago -
Based upon the corporate proposal for this week, research three
different data storage options for your...
asked 49 minutes ago -
The equilibrium constant, Kp , for the following reaction is
1.04×10-2 at 548 K. NH4Cl(s) NH3(g)...
asked 1 hour ago -
During a recent budgeting discussion, the CFO at "NW Accounting
Services" proposed eliminating the marketing research...
asked 1 hour ago -
Block B has a mass of 3.80kg and is moving to the left at a
speed...
asked 1 hour ago -
If n distinct objects are distributed randomly into
n distinct boxes, what is the probability that:...
asked 1 hour ago