Question

A friend is selling you today a bond purchased in 2010 with a 25-year maturity at $ 910.00. The bond has an annual coupon rate of $ 80. The prevailing rate in the current market is 10.0%. What is the value of the bond? Would you buy it if interest rates plan to drop to 6% in two years? How much would you earn if you wait for expiration?

PLEASE HELP QUICK

Answer #1

1) A 2-year maturity bond with face value of $1000 makes annual
coupon payments of $80. At a yield to maturity of 8 percent, the
bond must be selling for
2) A 2-year maturity bond with face value of $1000 makes annual
coupon payments of 8 percent per annum and is currently selling at
par. What return will you earn on the bond if you buy it today and
sell it at the end of the year when the yield...

Two years ago, you purchased a bond for $1036.67. The bond had
two years to maturity, a coupon rate of 8%, paid annually, and a
face value of $1,000. Each year, you reinvested all coupon interest
at the prevailing reinvestment rate shown in the table below. Today
is the bond's maturity date. What is your realized compound yield
on the bond?
Time
Prevailing Reinvestment Rate
0 (purchase date)
6.0%
End of Year 1
7.2%
End of Year 2 (maturity date)...

Suppose that you purchased a bond with a 4.9 percent coupon rate
for $930 today. The bond matures in ten years and makes semiannual
coupon payments.
Required:
a. What rate of return, expressed as an APR, do you expect to
earn on your investment if you plan to hold it until maturity?
b. Two years from now, the yield-to-maturity on your bond has
declined by 1 percentage point, and you decide to sell. How much
will you get for your...

4. Two years ago, you purchased a zero coupon bond with a 5-year
time to maturity, a 6% YTM, and a par value of $1,000. The bond’s
YTM today is 5%. If you sell the bond today, what is the annual
rate of return on your investment?

4. Two years ago, you purchased a zero coupon bond with a 5-year
time to maturity, a 6% YTM, and a par value of $1,000. The bond’s
YTM today is 5%. If you sell the bond today, what is the annual
rate of return on your investment? v

You have purchased a bond one year ago. When you purchased this
bond, it has a face value of $2500 with an annual coupon rate of 5%
and 10 years to maturity. Calculate the price of this bond today if
the required annual rate of return of similar bonds is 8 per cent.
[15 marks]
b. How does your answer to (a) change with semi-annual coupon
payments and a semi-annual discount rate of 4 per cent? Comment on
your answer....

1.
Assume you buy a bond with the following features
Bond maturity = 4
Coupon Rate = 5%
Face Value = $1,000
Annual Coupons
When you buy the bond the market interest rate = 4.50%
Immediately after you buy the bond the interest rate changes to
6.71%
What is the "reinvestment" effect in year 3 ?
2.
Bond E has the following
features:
Face value =
$1,000, Coupon Rate =
10%,
Maturity = 5 years, Yearly coupons
...

1.)
Last year Janet purchased a $1,000 face value corporate bond
with an 8% annual coupon rate and a 15-year maturity. At the time
of the purchase, it had an expected yield to maturity of 12.09%. If
Janet sold the bond today for $1,055.86, what rate of return would
she have earned for the past year? Do not round intermediate
calculations. Round your answer to two decimal places.
2.)
Bond X is noncallable and has 20 years to maturity, a...

Fresh Fruit, Inc. has a $1,000 par value bond that is currently
selling for $867. It has an annual coupon rate of 10.51 percent,
paid semiannually, and has 26-years remaining until maturity. What
would the annual yield to maturity be on the bond if you purchased
the bond today and held it until maturity?

A $1,000 maturity value bond has 15 years left to maturity. The
bond has an 8.5% coupon rate and pays interest annually.
a. If you want to earn a 7% rate of return, how much would you
be willing to pay today for this bond?
b. Suppose you buy the bond for the value you calculated in part
a. After holding the bond for two years and receiving two interest
payments, you sell the bond for $1,032.43. What annual, compound...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 49 seconds ago

asked 1 minute ago

asked 5 minutes ago

asked 5 minutes ago

asked 5 minutes ago

asked 13 minutes ago

asked 13 minutes ago

asked 13 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 17 minutes ago

asked 17 minutes ago