Question

A bond has a 10 percent coupon rate, makes annual payments, matures in 12 years, and has a yield-to-maturity of 7 percent.

One year from now the bond will have 11 years until maturity. Assume market interest rates increase to 9 percent. Given this: g. What will be the bond’s price one year from now? h. If you purchased the bond at the price in (a) and sold the bond at the price in (g) what would be your capital loss once you sold? What would be your annualized holding period return?

Answer #1

Formulae

Formulae as above

A bond has a 10 percent coupon rate, makes annual payments,
matures in 12 years, and has a yield-to-maturity of 7 percent.
1. Given this: a. What is the price of the bond today? b. What
is the bond’s current yield? c. Based on the yield-to-maturity and
the current yield, what is the bond’s expected capital gains yield
over the next year?
2. One year from now the bond will have 11 years until maturity.
Assume market interest rates remain...

8) Assume that a bond has a coupon rate of 10 percent, makes
annual coupon payments, and has a par value of $1,000. Calculate
the bond’s value under the following conditions.
The bond matures in 5 years and the YTM is 5%:
The bond matures in 5 years and the YTM is 10%:
The bond matures in 5 years and the YTM is 15%:
The bond matures in 15 years and the YTM is 5%:
The bond matures in 15...

Alphabet Inc. has a 7 percent coupon bond outstanding that
matures in 13.5 years. The bond makes semiannual coupon payments.
The par value of the bond is $1000, and it is currently selling on
the market for $550.40. What is the bond’s yield-to-maturity?

A bond with a 6% coupon rates makes annual coupon payments and
has 4 years until maturity. The appropriate spot-rate curve is:
Year Spot Rate
1 6%
2 5.90%
3 5.10%
4 4.80%
A) What is the price per 100
par?
B) What is the bond’s yield to
maturity?

An 8 percent annual coupon, noncallable $1,000 bond has ten
years until it matures and a yield to maturity of 9.1 percent. What
should be the price be?

Consider a 20-year bond with an annual coupon of 10%.
The coupon rate will remain fixed until the bond matures. The bond
has a yield to maturity of 8%. Which of the following statements is
correct?
1) The bond should currently be selling at its par
value.
2) If market interest rates decline, the price of the
bond will also decline.
3) If market interest rates remain unchanged, the bond’s
price one year from now will be higher than it...

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...

Johnston, Inc. is selling bonds for $775.37. Each bond has an 8%
coupon rate and makes payments semi-annually. The bond matures in
25 years. What is the bond’s yield-to-maturity?
Shieldsly, Inc. has a 9 percent coupon bond that matures in 5
years. The bond pays interest annually. What is the market price of
a $1,000 face value bond if the yield to maturity is 7.56
percent?
$1,126.64
$1,000.00
$1,146.13
$1,058.17
$363.55

A bond has an 8.2 percent coupon (and makes semi-annual coupon
payments), a $1,000 par value, matures in 12.5 years, and is priced
to provide a yield to maturity of 7.00 percent.
What is the current yield?

2. Today, a bond has a coupon rate of 8.4 percent, par value of
1,000 dollars, YTM of 4.82 percent, and semi-annual coupons with
the next coupon due in 6 months. One year ago, the bond’s price was
1,041.94 dollars and the bond had 17 years until maturity. What is
the current yield of the bond today? Answer as a rate in decimal
format so that 12.34% would be entered as .1234 and 0.98% would be
entered as .0098.
3....

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