Price when bought = 100/1.07^ 2 = | $ 87.34 |
Sale price = 100/1.05 = | $ 95.24 |
Rate of profit = 95.24/87.34 - 1 = | 9.05% |
8. An investor just bought a two-year zero-coupon bond of nominal value 100$ with yield 7%....
An-investor initially purchases a 5-year, 6% annual coupon payment bond at par value of $100. Assume the interest rates go up by 1% right after the first coupon is received and then go down by 2% right after the fourth coupon is received. Assume the term structure is flat and coupon payments are reinvested in zero-coupon bonds that mature at the end of investment horizon. a) What is investor's realized rate of return if he holds the bond until maturity?...
2. You just bought a newly issued bond which has a face value of S1,000 and pays its coupon once annually. Its coupon rate is 5%, maturity is 20 years and the yield to maturity for the bond is currently 8%. a. Do you expect the bond price to change in the future when the yield stays at 8%? Why or why not? Explain. (No calculation is necessary.) (2 marks) b. Calculate what the bond price would be in one...
An investor bought $100,000 worth (roughly $750,000 face value!) of 30-year zero coupon Treasury STRIPS priced to yield 7%. One month later the yield on the STRIPS had risen to 8%. Use the modified duration approximation to estimate the approximate new market value shown when the investor looked at the next monthly statement. A. $108,000 B. $99,000 C. $92,600 D. $72,000
You just bought a 7-year zero coupon bond for $742.77. What is the (expected) taxable capital gain on this bond a year from now? Question 7 options: $14.33 $18.51 $22.47 $32.23 None of the above.
You just bought a 7-year zero coupon bond for $742.77. What is the expected) taxable capital gain on this bond a year from now? $14.33 $18.51 $22.47 $32.23 None of the above.
You just bought a 7-year zero coupon bond for $742.77. What is the expected) taxable capital gain on this bond a year from now? $14.33 $18.51 $22.47 $32.23 None of the above.
Claire’s issued a 7 year, 6.125% coupon bond with a $100 par value in January 2013 that matures in January 2020. The table below has the price of the bond when issued and for the past four Januaries. Determine the yield to maturity for each of the dates. If an investor bought this bond January 2015 and sold it in January 2017 (receiving two coupon payment) what would be the return on investment? Price Jan-13 $100.00 Jan-14 $70.00 Jan-15 $30.00...
You just bought a 7-year zero coupon bond for $742.77. What is the (expected) taxable capital gain on this bond a year from now? Question 3 options: $14.33 $18.51 $22.47 $32.23 None of the above.
A.Zero Coupon Bonds A 7 year maturity zero coupon corporate bond has an 8% promised yield. The bond's price should equal B.The Fishing Pier has 6.40 percent, semi-annual bonds outstanding that mature in 12 years. The bonds have a face value of $1,000 and a market value of $1,027. What is the yield to maturity? C.Bond Yields Find the promised yield to maturity for a 7% coupon, $1,000 par 20 year bond selling at $1115.00. The bond makes semiannual coupon...
The bond has a face value of $1000 and is bought at par with a coupon rate of 5%. After one year, the market yield on the bond changes to 9 %. Yrs to maturity Initial curr yield Initial P(t) P(t+1) Capital Gain Rate of Return 1 0.05 1000 1000.000 0.000 0.05 2 0.05 1000 3 0.05 1000 5 0.05 1000 7 0.05 1000 The bond has a face value of $1000 and is bought at par with a coupon...