1. What is the price of a bond if the coupon rate is 4%, the YTM...
1. What is the price of a bond if the coupon rate is 4%, the YTM is 4%, and the number of years to maturity is 15?
2. A bond is trading at a discount. Which of the following is true?
a. The Yield to Call is LESS than the Yield to Maturity
b. The Current Yield is LESS than the Nominal Yield
c. The Nominal Yield is GREATER than the Yield to Call
d. The Yield to Maturity is GREATER than the Nominal Yield
3. You purchase 3 oil futures (1,000 barrels per contract) for $50/barrel on 10% margin. What is your dollar profit/loss if the price of oil goes to $65/barrel?
a. $45,000.00
b. $30,000.00
c. $300,000.00
d. $15,000.00
Homework Answers
Hi, As per the HOMEWORKLIB RULES, in case of multiple questions, I need to solve the first question.
The price of the bond is computed as shown below:
Whenever the bond's coupon rate and yield to maturity are same, the bond always trades at par value.
In the present question the coupon rate and yield to maturity are same i.e. 4%. Hence the price of the bond will be $ 1,000
I request you to please post remaining questions separately, since as per the guidelines in case of multiple questions, I need to solve the first question.
Feel free to ask in case of any query relating to this question
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