Question

a. The twenty-year bond yields 6.5% and has a coupon of 8.5%. If this yield to...

a. The twenty-year bond yields 6.5% and has a coupon of 8.5%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price $ b. What is the total return to an investor who held the bond over this year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Total return %

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Current Price of bond is calculated in excel and screen shot provided below:

Current Price of bond is $1,220.37.

After 1 year, year remains in maturity of bond will be 1 year. So price of bond after 1 year is calculated in excel and screen shot provided below:

Price of bond after one year will be $1,214.69.

b.

Total return = (Price after one year + Coupon Received - Price now) / Price now

= ($1,214.69 + $85 - $1,220.37) / $1,220.37

= $79.32 / $1,220.37

= 6.50%

Total return in one year is 6.50%.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
a. The twenty-year bond yields 5.6% and has a coupon of 7.6%. If this yield to...
a. The twenty-year bond yields 5.6% and has a coupon of 7.6%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price            $ b. What is the total return to an investor who held the bond over this year? (Do not round intermediate calculations. Enter your answer as a percent rounded to...
a. The five-year bond yields 6.4% and has a coupon of 8.5%. If this yield to...
a. The five-year bond yields 6.4% and has a coupon of 8.5%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $100. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the total return to an investor who held the bond over this year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal...
The 7.9%, ten-year bond yields 5.9%. If this yield to maturity remains unchanged, what will be...
The 7.9%, ten-year bond yields 5.9%. If this yield to maturity remains unchanged, what will be its price one year hence? Assume annual coupon payments and a face value of $1,000. What is the total return to an investor who held the bond over this year? A government bond matures in 4 years, makes annual coupon payments of 5.9% and offers a yield of 3.9% annually compounded. Assume face value is $1,000. a) Suppose that one year later the bond...
You buy a 20-year bond with a coupon rate of 9.4% that has a yield to...
You buy a 20-year bond with a coupon rate of 9.4% that has a yield to maturity of 10.3%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 11.3%. What is your return over the 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
You buy a 20-year bond with a coupon rate of 9.8% that has a yield to...
You buy a 20-year bond with a coupon rate of 9.8% that has a yield to maturity of 10.9%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 11.9%. What is your return over the 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Please Explain Answer
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon...
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 8.8%, and sells for $1,120. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.) a. If the bond has a yield to maturity of 9.2% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your answer to nearest whole number.) b. What will be the rate of return...
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon...
A bond with a face value of $1,000 has 10 years until maturity, carries a coupon rate of 7.4%, and sells for $1,160. Interest is paid annually. (Assume a face value of $1,000 and annual coupon payments.) a. If the bond has a yield to maturity of 10.6% 1 year from now, what will its price be at that time? (Do not round intermediate calculations. Round your answer to nearest whole number.) b. What will be the rate of return...
You buy a(n) eleven-year bond that has a 8.00% current yield and a 8.00% coupon (paid...
You buy a(n) eleven-year bond that has a 8.00% current yield and a 8.00% coupon (paid annually). In one year, promised yields to maturity have risen to 9.00%. What is your holding-period return? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Maxcorp’s bonds sell for $1,152.98. The bond life is 9 years, and the yield to maturity...
Maxcorp’s bonds sell for $1,152.98. The bond life is 9 years, and the yield to maturity is 8.5%. What is the coupon rate on the bonds? (Assume a face value of $1,000 and annual coupon payments.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
A bond with a face value of $1,000 has 14 years until maturity, carries a coupon...
A bond with a face value of $1,000 has 14 years until maturity, carries a coupon rate of 8.6%, and sells for $1,104. a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.) c. What is the yield to maturity...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT