Probability [p] | Required Yield [r] | Bond price 1 year from now [v] | E[v] = v*p | d = v-E[v] | d^2 | p*d^2 | |
0.1 | 5.50 | $ 807.22 | $ 80.72 | $ 15.08 | $ 227.31 | $ 22.73 | |
0.1 | 5.75 | $ 799.61 | $ 79.96 | $ 7.47 | $ 55.81 | $ 5.58 | |
0.6 | 6.00 | $ 792.09 | $ 475.26 | $ -0.05 | $ 0.00 | $ 0.00 | |
0.1 | 6.25 | $ 784.66 | $ 78.47 | $ -7.48 | $ 55.88 | $ 5.59 | |
0.1 | 6.50 | $ 777.32 | $ 77.73 | $ -14.82 | $ 219.54 | $ 21.95 | |
Note: | $ 792.14 | $ 55.85 | |||||
Bond price 1 year later for 5.50% yield = 1/1.055^4 = | $ 0.81 | ||||||
a) | Expected price when the bond is sold = $792.14. | ||||||
b) | Standard deviation = 55.85^0.5 = $7.47 |
You own a S1,000 face value, zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in o...
must be completed by hand You own a $1,000-par zero-coupon bond that has 5 years of remaining maturity. You plan on selling the bond in one year and believe that the required yield next year will have the following probability distribution: Note that the required yield can be interpreted as the discount rate. a. What is your expected required yield when you sell the bond? b. Calculate the variance of the required yield. c. Calculate the bond’s price in each...
Problem 16. (pt) Lily owns a $1,000 par zero coupon bond that has six years of remaining maturity. She plans on selling the bond in one year and believes that the required yield next year will have the following probability distribution: Probability 0.1 0.2 0.2 0.3 0.1 Required Yield (%) 6.10 6.75 7.20 7.25 7.45 7.65 0.1 a. What is the expected required yield of the bond at the time of sale? b. What is the standard deviation of the...
The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) 1 2 3 4 5 YTM 5.00 %5.00% 5.50 %5.50% 5.75 %5.75% 5.95 %5.95% 6.05 %6.05% What is the price per $ 100$100 face value of a two-year, zero-coupon, risk-free bond? The price per $ 100$100 face value of the two-year, zero-coupon, risk-free bond is $nothing. (Round to the nearest cent.)
You own a zero-coupon bond of Amazon. It matures in 4 years, has a face (par) value of $1,000. An investor is interested in buying the bond from you it she can earn a yield to maturity of 11.00%. How much is the investor willing to pay for the bond (What is the value of the bond)?
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...
The current zero-coupon yield curve for risk-free bonds is as follows: 1 5 Maturity (years) YTM 5.00% 5.50% 5.75% 5.95% 6.05% What is the price per $100 face value of a four-year, zero-coupon, risk-free bond? The price per $100 face value of the four-year, zero-coupon, risk-free bond is $ . (Round to the nearest cent.)
. Current yield is 6.2% today on a bond that is just issued with 4 years to maturity, 6.5% coupon rate and S1,000 face value a) (10 points) What will be the price of this bond exactly in two years (after it distributes its second coupon) if the market rate doubles? c (15 points) How much capital gains should an investor expect to get in the subsequent year if she buys this bond at that time (in two years, after...
You own a bond with the following features: 5 years to maturity, face value of $1000, coupon rate of 2% (annual coupons) and yield to maturity of 6.3%. If you expect the yield to maturity to remain at 6.3%, what do you expect the price of the bond to be in two years? Enter the answer in dollars, rounded to the nearest cent (2 decimals).
Question Find the equilavent years to maturity ofa zero-coupon bond to one that has a coupon rate of 8.60%, 5 years to maturity and a yield to maturity of 9.20% Find the equilavent years to maturity of a zero-coupon bond to one that has a coupon rate of 660% (annual coupons) 10 years to maturity, and a yield to maturity 3 of 6.00%. Find the approximate percentage change in the price of a bond due to a 10 basis point...
Please help. Answer is 0.0418. Consider the following three bonds of S1,000 face value. Bond Maturity (year) Price Coupon Rate 4.0% A 1002.46 0.5 В 4.6 % 1006.84 1.0 1.5 0.0 % 936.80 C You form a portfolio by buying 3 shares of Bond A, 2 shares of Bond B, and 5 shares of Bond C. Calculate the yield to maturity of the portfolio