Question

Bond A has the following features:

Face value = $1,000,

Coupon Rate = 8%,

Maturity = 10 years, Yearly coupons

The market interest rate is 4.84%

If interest rates remain at 4.84%, what will the price of bond A be in year 1?

Answer #1

No of periods = 10 years

Coupon per period = Coupon rate * Face value

Coupon per period = 8% * $1000

Coupon per period = $80

Bond price in 1 year

Bond Price =
Coupon / (1 + YTM)^{period} + Face value / (1 +
YTM)^{period}

Bond Price = $80 / (1 + 4.84%)^{1} + $80 / (1 +
4.84%)^{2} + ...+ $80 / (1 + 4.84%)^{9} + $1000 /
(1 + 4.84%)^{9}

Using PVIFA = ((1 - (1 + Interest rate)^{- no of
periods}) / interest rate) to value coupons

Bond Price = $80 * ((1 - (1 + 4.84%)^{-9}) / 4.84%) +
$1,000 / (1 + 4.84%)^{9}

Bond Price = $572.70 + $653.52

**Bond Price in 1 year = $1226.22**

5- Bond A has the following features:
Face value =
$1,000,
Coupon Rate = 8%,
Maturity = 9 years, Yearly coupons
The market
interest rate is 5.05%
If interest
rates remain at 5.05%, what will the price of bond A be in year
1?

Bond A has the following features: Face value = $1,000, Coupon
Rate = 10%, Maturity = 9 years, Yearly coupons The market interest
rate is 3.41% If interest rates remain at 3.41%, what is the
percentage capital gain or loss on bond A if you sell the bond in
year 1? State your answer to 2 decimal places (e.g., 3.56, 0.29) If
there is a capital loss make sure to include a negative sign in
your answer (e.g., -0.23)

Bond A has the
following features:
Face value =
$1,000,
Coupon Rate =
5%,
Maturity = 10 years,
Yearly coupons
The market
interest rate is 6.30%
What is the current
yield for bond A from today to year 1?
Calculate your answer
to 2 decimal places (e.g., 5.23)

Bond E has the following features: Face value = $1,000, Coupon
Rate = 7%, Maturity = 5 years, Yearly coupons The market interest
rate is 3.09% If interest rate remains at 3.09% for the life of the
bond (i.e., 3.09 years), what is the price of Bond E in year 2?

Bond E has the following features:
Face value =
$1,000, Coupon Rate =
9%,
Maturity = 5 years, Yearly coupons
The market
interest rate is 3.47%
If interest rate remains at 3.47% for the life of the bond
(i.e., 3.47 years), what is the price of Bond E in year 2?

Bond A has the following features: Face value = $1,000, Coupon
Rate = 5%, Maturity = 9 years, Yearly coupons The market interest
rate is 7.92% If interest rates remain at 7.92%, what is the
percentage capital gain or loss on bond A if you sell the bond in
year 1? State your answer to 2 decimal places (e.g., 3.56, 0.29) If
there is a capital loss make sure to include a negative sign in
your answer (e.g., -0.23).

Bond A has the following features:
Face value =
$1,000,
Coupon Rate = 9%,
Maturity = 6 years, Yearly coupons
The market
interest rate is 5.34%
If interest rates remain at 5.34%, what is the percentage
capital gain or loss on bond A if you sell the bond in year 1?
State your answer to 2 decimal places (e.g., 3.56, 0.29)
If there is a capital loss make sure to include a negative sign
in your answer (e.g.,...

3-
Bond A has the following features:
Face value =
$1,000,
Coupon Rate = 4%,
Maturity = 10 years, Yearly coupons
The market
interest rate is 4.6%
What is today’s price of bond A?

Bond E has the following
features:
Face value =
$1,000, Coupon Rate =
4%,
Maturity = 5 years, Yearly coupons
The market
interest rate is 3.55%
If interest rate remains at 3.55% for the life of the bond
(i.e., 3.55 years), what is the price of Bond E in year 4?

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
...

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