Both coupon rate and price quote is not correctHomework Answers
Return on T-Bills and Corporate can be compared on the basis of Bond-equivalent yield (BEY) or Coupon-equivalent Yield making use of number of days for settlement and maturity aspects of both the Investments. The appropriate term for the above mentioned comparison criteria can also be referred as 'Par Value' comparison.
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Both coupon rate and price quote is not correct QUESTION 1 An investor wants to compare...
An investor purchases one municipal bond and one corporate bond that pay rates of return of...
An investor purchases one municipal bond and one corporate bond that pay rates of return of 7% and 8.5%, respectively. If the investor is in the 20% tax bracket, his after-tax rates of return on the municipal and corporate bonds would be, respectively, _____. An investor buys a T-bill at a bank discount quote of 5.40 with 90 days to maturity. The investor's actual annual rate of return on this investment is _____. What is the tax exempt equivalent yield...
1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20...
1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20 years remaining until maturity at a price equal to par value. The investor’s investment horizon is eight years. The approximate modified duration of the bond is 11.470 years. What is the duration gap at the time of purchase? (Hint: use approximate Macaulay duration to calculate the duration gap) 2. An investor plans to retire in 10 years. As part of the retirement portfolio, the...
Analyze the 20-year, 8% coupon rate (annual payment), $1,000 par value bond. The bond currently sells...
Analyze the 20-year, 8% coupon rate (annual payment), $1,000 par value bond. The bond currently sells for $1,318. What's the bond's yield to maturity? o o 5.36% 5.68% o 6.75% o 7.85% A 10-year corporate bond has an annual coupon payment of 8%. The bond is currently selling at par ($1.000). Which of the following statement is NOT correct? The bond's yield to maturity is 8%. The bond's current yield is 8%. If the bond's yield to maturity remains constant,...
Question 10 A coupon bond paying semiannual interest has an ask price quote of 105% of...
Question 10 A coupon bond paying semiannual interest has an ask price quote of 105% of its $1,000 par value. The last interest payment was made 150 days ago and the coupon period has 182 days If the coupon rate is 8.60%, what is the invoice price (in $) of the bond? S points Invoice price (round to nearest cent)
1. A taxable bond with a coupon rate of 7.00% has a market price of 99.11%...
1. A taxable bond with a coupon rate of 7.00% has a market price of 99.11% of par. The bond matures in 19.00 years ans pays semi-annually. Assume an investor has a 37.00% marginal tax rate. The investor would prefer otherwise identical tax-exempt bond if it's yield to maturity was more than _____% SHOW FINANCE CALCULATOR KEYS
An investor is considering the purchase of a 20-year 7% coupon bond selling for $816 and...
An investor is considering the purchase of a 20-year 7% coupon bond selling for $816 and a par value of $1,000. The yield to maturity for this bond is 9%. Assume the investor’s horizon is 15 years. Market participants expect the yield rate for comparable issues to be 10% for the first 10 years and 6% for years 11 to 20. 1. What is the projected sale price at the end of five years? 2. What is total coupon payments...
An investor is considering the purchase of a 20-year 7% coupon bond selling for $816 and...
An investor is considering the purchase of a 20-year 7% coupon bond selling for $816 and a par value of $1,000. The yield to maturity for this bond is 9%. Assume the investor’s horizon is 15 years. Market participants expect the yield rate for comparable issues to be 10% for the first 10 years and 6% for years 11 to 20. 1. What is the projected sale price at the end of 15 years? 2. What is total coupon payments...
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...
An investor is considering purchasing a bond with a 7.45 percent coupon interest rate, a par...
An investor is considering purchasing a bond with a 7.45 percent coupon interest rate, a par value of $1,000, and a market price of $1,033.31. The bond will mature in nine years. Based on this information, answer the followingquestions: a. What is the bond's current yield? b. What is the bond's approximate yield to maturity? c. What is the bond's yield to maturity using a financial calculator? Note: Assume coupon payments are paid annually a. The bond's current yield is...
18. Today (T=0), an investor purchased a five year bond with an 8.0% coupon at par....
18. 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 and can reinvest coupons at the YTM, 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...
Analyze the 20-year, 8% coupon rate (annual payment), $1,000 par value bond. The bond currently sells for $1,318. What's the bond's yield to maturity? o o 5.36% 5.68% o 6.75% o 7.85% A 10-year corporate bond has an annual coupon payment of 8%. The bond is currently selling at par ($1.000). Which of the following statement is NOT correct? The bond's yield to maturity is 8%. The bond's current yield is 8%. If the bond's yield to maturity remains constant,...
Question 10 A coupon bond paying semiannual interest has an ask price quote of 105% of its $1,000 par value. The last interest payment was made 150 days ago and the coupon period has 182 days If the coupon rate is 8.60%, what is the invoice price (in $) of the bond? S points Invoice price (round to nearest cent)
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...
18. 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 and can reinvest coupons at the YTM, 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...
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