Question

Six months ago you purchased a $100,000, 2% coupon bond with 7 years to maturity. The bond makes semi-annual coupon payments, and, at the time of purchase, had a yield-to-maturity of 2.40%, annual rate, compounded semiannually.

a) Calculate price (per hundred dollars of face value) you paid for the bond.

b) Today, after noticing that the yield has dropped to 2.10%, you sell the bond. What is the current price (per hundred dollars of face value)?

c) Calculate your gains or losses, and holding period yield from the purchase and subsequent sale of the bond.

Answer #1

Six years ago you purchased a $1,000 par bond with 13 years to
maturity and a 6.5% semi-annual coupon at a price of $1,200. If the
yield to maturity of the bond remained constant, what should be the
price today?

A semi-annual coupon bond with 2 years to maturity and 8% per
annum coupon rate has a face value of $1,000 with a yield to
maturity of 12% per annum (compounded semi-annually). Using the
bond’s modified duration, estimate the new bond price when the
yield to maturity immediately changes from 12% per annum to 8% per
annum.
Select one:
a. 66.27 dollars.
b. 996.97 dollars.
c. 930.70 dollars.
d. 864.43 dollars.
e. None of the statements is true.

You purchased a $1,000 bond with a 4.6% semi-annual coupon and
15 years to maturity six years ago at a price of $855. If the yield
has remained constant, what should be the price of the bond
today?
A. $959.46
B. $592.55
C. $900.24
D. $898.05

You purchased an annual interest coupon bond one year ago that
had six years remaining to maturity at that time. The coupon
interest rate was 10% and the par value was $1,000. At the time you
purchased the bond, the yield to maturity was 8%. If you sold the
bond after receiving the first interest payment and the yield to
maturity continued to be 8%, your annual total rate of return on
holding the bond for that year would have...

a
bond was issued 5 years ago at par with a maturity of 10 years, a
yield-to-maturity of 6.50% compounded semiannually and semi annual
coupons. what is the price of this bond today immediately after the
receipt of today's coupon if the YTM has fallen to 5.50% compounded
semi annually?

You purchased a 20-year bond 15 years ago at a yield to maturity
of 7.56%. The bond has a face value of $1,000 and a coupon rate of
9.00%, paid semi-annually. If the investors’ required rate of
return on this bond has stayed the same for 15 years, what is the
price of the bond today?
$1,000.00
$1,058.17
$1,146.13
$1,059.94

A bond was issued three years ago at a price of $1,040 with a
maturity of six years, a yield-to-maturity (YTM) of 5.25%
compounded semi-annually, and a face value of $1,000 with
semi-annualy coupons. What is the price of this bond today
immediately after the receipt of today's coupon if the YTM has
risen to 6.50% compounded semi-annually?

A bond was issued three years ago at a price of $1,052 with a
maturity of six years, a yield-to-maturity (YTM) of 6.75%
compounded semi-annually, and a face value of $1,000 with
semi-annualy coupons. What is the price of this bond today
immediately after the receipt of today's coupon if the YTM has
risen to 8.00% compounded semi-annually?

A bond was issued three years ago at a price of $934 with a
maturity of six years, a yield-to-maturity (YTM) of 4.75%
compounded semi-annually, and a face value of $1,000 with
semi-annualy coupons. What is the price of this bond today
immediately after the receipt of today's coupon if the YTM has
fallen to 3.50% compounded semi-annually?

A bond was issued three years ago at a price of $1,060 with a
maturity of six years, a yield-to-maturity (YTM) of 7.75%
compounded semi-annually, and a face value of $1,000 with
semi-annualy coupons. What is the price of this bond today
immediately after the receipt of today's coupon if the YTM has
risen to 9.00% compounded semi-annually?

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