Question

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 been

11.95%.

7.82%.

7.00%.

None of the options

8.00%.

Answer #1

Annual return on holding the bond for 1 year= 8.00%

The answer is last option.

Details as follows:

You purchased a 5-year annual-interest coupon bond 1 year ago.
Its coupon interest rate was 6%, and its par value was $1,000. At
the time you purchased the bond, the yield to maturity was 4%. If
you sold the bond after receiving the first interest payment and
the bond's yield to maturity had changed to 3%, your annual total
rate of return on holding the bond for that year would have been
approximately _________.
0.6%
8.9%
5%
5.5%

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...

Three years ago, you bought a bond for $737.64. At that time,
the bond had seven years remaining until maturity. The bond has a
coupon rate of 8 percent (stated as an annual rate) and a par value
of $1,000. Coupon payments are made semiannually.
a. What was the yield to maturity when you purchased the bond
three years ago?
b. Assume the yield to maturity today is the same as the yield
to maturity you computed in part A....

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?

You are considering a coupon bond (par=$1,000) that pays
semi-annual interest with a coupon rate of 6%. The bond currently
has a bid price of 116.89 and an ask price of 117.00. If the last
interest payment was made 60 days ago, and there are 180 days
between the last interest payment and the next interest payment,
what is the invoice price of the bond?
A.
$1,180.0
B.
$1,170.0
C.
$1,190.6
D.
$1,168.9
You purchase a 10-year T-note which has...

Two years ago an investor purchased a 4% semi-annual compounding
coupon bond with a remaining maturity of 20 years at a price of (at
that time) 90% of par. Today, i.e. two years after the purchase,
the investor realizes that the bond has exactly the same price like
it had two years ago (i.e. 90%). Based on this information, which
of the following answers is correct:
a) The YTM of the 4% Bond today is the higher than two years...

One year ago, an investor purchased a 10-year, $1,000
par value, 8% semiannual coupon bond with an 8% yield to maturity.
Now, one year later, interest rates remain unchanged at 8%. If the
investor sells the bond today (immediately after receiving the
second coupon payment, and with no transaction costs), he will
have:
A. a capital gain of $80.
B. a capital loss of $80.
C. no capital gain or loss.

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

One year ago, you purchased an 8% coupon rate bond when it was
first issued and priced at its face value of $1,000. Yesterday the
bond paid its second semi-annual coupon. The bond currently has 7
years left until maturity and has a yield to maturity of 12%. If
you sell the bond today, what will your return have been from this
investment during the year you held the bond and collected the
coupon payments?

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