8.8 Consider a bond with m coupons per year of rater per annum. Show that when...
Consider a bond whose annual coupon rate is 10% and coupons are paid twice a year evenly. Its face-value is $100,000 and maturity is 2 years. Yield-to-maturity is 10% (annual) (fixed). What are the duration (in years) and convexity of the bond?
Consider a bond whose annual coupon rate is 10% and coupons are paid twice a year evenly. Its face-value is $100,000 and maturity is 2 years. Yield-to-maturity is 10% (annual) (fixed). What are the duration (in years) and convexity of the bond?
Consider a bond with the following characteristics. Par: $1,000 Two coupon payments per year (i.e., coupons are paid semi-annually) Coupon rate: 4.00% Years to maturity: 8 Bond price: $1,000 Suppose that the annual market interest rate for this bond drops by 1%. What is the new bond price? Note: recall that the annual yield-to-maturity (YTM) is the market interest rate on the bond. $1,070.66 $1,000.00 $934.72
Problem #3: A 5 year bond has semiannual coupons of 14% per annum. The continuously compounding yield is 19%. The bond has a face value of $300. You will be pricing the bond initially, and at future times throughout the life of the bond as it pulls to par at maturity, using the same continuously compounding yield throughout. Since the yield is given with continuous compounding, the usual formulas will not work without changing the yield to the equivalent discrete...
PROBLEM 2 A/ Suppose a ten-year, $1,000 bond with an 8.8% coupon rate and semiannual coupons is trading for 1,034.37. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? (Round to two decimal places.) b. If the bond's yield to maturity changes to 9.2% APR, what will be the bond's price? The new price for the bond is (Round to the nearest cent.) B/ Suppose a five-year, $ 1000 bond with annual coupons has...
Suppose a ten-year, $1,000 bond with an 8.8 % coupon rate and semiannual coupons is trading for $1,034.43. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.3 % APR, what will be the bond's price?
QUESTION 8 (16 marks) (a) [5 marks] John purchases a $1000 face value 10-year bond with coupons of 8% per annum paid half-yearly. The bond will be redeemed at C. The purchase price is $800 and the exact present value of the redemption amount C is $301.5116. Calculate the redemption amount C, and state if the bond is redeemed at par, discount or premium. (Hint: a at 3% is 14.87747 ag at 4% is 13.59033, a at 5 % is...
Consider a 3-year risk-free bond, which pays annual coupons. The coupon rate is 3.5% and the face value is 500. The bond is issued at time t=0, pays coupons at time t=1,2,3 and face value at time t=3. You purchase the bond at time t=0. While holding the bond, you do not reinvest the coupon payments. What is the future value, at time t=2, of the coupon payments you received if you held the bond from t=0 to maturity? What...
do not round Suppose a ten-year, $1,000 bond with an 8.8% coupon rate and semiannual coupons is trading for $1,034.15. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.2% APR, what will be the bond's price?
Consider a 2-year $4000 bond that's redeemable at par and pays semi-annual coupons at a rate of c2) 8%. 70. (a) Suppose that the yield rate is 4% compounded annually. Determine: The purchase price of the bond. P = $ %3D The bond's duration to 3 decimals. D: years %3| Note: Use the purchase price to the closest cent in your duration calculation. (b) Suppose that the yield rate is 4% compounded semi-annually. Determine: The purchase price of the bond....