3) A ____________ is a specific yield that an investor would receive if they purchased a...
3) A ____________ is a specific yield that an investor would receive if they purchased a bond today and held the bond to its maturity (end of life).
Homework Answers
YTM (Yield to Maturity)
A YTM is an yield that an investor will receive if they purchase a bond today and hold the bond till its maturity.
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3) A ____________ is a specific yield that an investor would
receive if they purchased a...
Suppose that a company issues a bond with a coupon of 4% paid annually. The bond has a maturity of 30 years and a yield to maturity of 7%. An investor purchased this bond at a fair price and holds the bond for 1 year. If the yield to maturity at the end
Suppose that a company issues a bond with a coupon of 4% paid annually. The bond has a maturity of 30 years and a yield to maturity of 7%. An investor purchased this bond at a fair price and holds the bond for 1 year.If the yield to maturity at the end of bond’s life changes to 8%, what will be the rate of return that this investor is going to earn at the end of year 1?The fair price...
A. Today (T=0), an investor purchased a seven year bond with an 8.0% coupon for $105,500....
A. Today (T=0), an investor purchased a seven year bond with an 8.0% coupon for $105,500. The bond has a face value of $100,000. The bond’s yield to maturity is closest to: 5.5% 6.7% 7.0% 8.0% 11.0 % B. Today (T=0), an investor purchased a nine year bond with an 8.0% coupon for $9,680. The bond has a face value of $10,000. In six months (T=0.5) interest rates have increased by 1.0% and the investor decides to sell the bond...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
19. Today (T=0), an investor purchased a seven year bond with an 8.0% coupon for $105,500....
19. Today (T=0), an investor purchased a seven year bond with an 8.0% coupon for $105,500. The bond has a face value of $100,000. The bond's yield to maturity is closest to: A. 5.5 % B. 6.7 % C. 7.0 % D. 8.0 % E. 11.0% 20. Today (T=0), an investor purchased a nine year bond with an 8.0% coupon for $9,680. The bond has a face value of $10,000. In six months (T=0.5) interest rates have increased by 1.0%...
Today (T=0), an investor purchased a five year bond with an 8.0% coupon at par. Assume...
Today (T=0), an investor purchased a five year bond with an 8.0% coupon at par. Assume interest rates do not change from now until the bond’s maturity. If the investor holds the bond from now until maturity, the investor’s rate of return will be closest to
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium...
What is the Yield to Maturity (YTM) on a 3.65% T-Bond with a maturity date in October 2021 if the current market price is 111.82? How should you interpret this YTM? A) YTM = 0.46%, the maximum premium over face value of the bond that an investor should pay. B) YTM = 1.84%, the average annual return the investor will earn if the bond is purchased at the quoted price and held to maturity. C) YTM = 0.92%, the average...
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000....
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000. Today (with 9 years to maturity) the bond is priced to yield 7.70%. If the bond is sold, what is the total return to the investor (interest plus appreciation) for the 1-year holding period? Hint: The total return includes the coupon rate plus the appreciation (or depreciation) due to the change in rates. Therefore, calculate the current price based on the yield, and then...
A tax-exempt municipal bond has a yield to maturity of 4.99%. An investor, who has a...
A tax-exempt municipal bond has a yield to maturity of 4.99%. An investor, who has a marginal tax rate of 30.00%, would prefer and an otherwise identical taxable corporate bond if it had a yield to maturity of more than ____%.
1) 2) A bond with a 7-year duration is worth $1,076, and its yield to maturity...
1)
2)
A bond with a 7-year duration is worth $1,076, and its yield to maturity is 7.6%. If the yield to maturity falls to 7.48%, you would predict that the new value of the bond will be approximately You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 7% compound rate of return per year for 6 years. If you pay $15,000 for the GIC today and receive no interest along...
Today (T=0), an investor purchased a five year bond with an 8.0% coupon at par. Assume...
Today (T=0), an investor purchased a five year bond with an 8.0% coupon at par. Assume interest rates do not change from now until the bond’s maturity. If the investor holds the bond from now until maturity, the investor’s rate of return will be closest to: A. 4.0% B. 6.7% C. 7.0% D. 8.0% E. 9.7%
19. Today (T=0), an investor purchased a seven year bond with an 8.0% coupon for $105,500. The bond has a face value of $100,000. The bond's yield to maturity is closest to: A. 5.5 % B. 6.7 % C. 7.0 % D. 8.0 % E. 11.0% 20. Today (T=0), an investor purchased a nine year bond with an 8.0% coupon for $9,680. The bond has a face value of $10,000. In six months (T=0.5) interest rates have increased by 1.0%...
One year ago, an investor purchased a 10-year 8% annual coupon bond at par of $1,000. Today (with 9 years to maturity) the bond is priced to yield 7.70%. If the bond is sold, what is the total return to the investor (interest plus appreciation) for the 1-year holding period? Hint: The total return includes the coupon rate plus the appreciation (or depreciation) due to the change in rates. Therefore, calculate the current price based on the yield, and then...
1)
2)
A bond with a 7-year duration is worth $1,076, and its yield to maturity is 7.6%. If the yield to maturity falls to 7.48%, you would predict that the new value of the bond will be approximately You have purchased a guaranteed investment contract (GIC) from an insurance firm that promises to pay you a 7% compound rate of return per year for 6 years. If you pay $15,000 for the GIC today and receive no interest along...
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