Question

Suppose that you purchased a A rated $5,000 annual coupon bond with an 6.7% coupon rate and a 11-year maturity at par value. The current rate on 11-year US treasuries is 3%. Two years later, you sell the bond, and for a yield of 7.922%, what was your capital gain (+) or capital loss (-) in dollars and cents? (make your answer positive for a gain, negative for a loss)

Answer #1

Face/Par Value of bond = $5000

Annual Coupon Bond = $5000*6.7%

= $335

No of years to maturity from now (n) = 11 years - 2 years = 9

Current Yield (YTM) = 7.922%

Calculating the Selling price of Bond 2 years later:-

Price = $419.902 + $2517.562

Selling Price = $4617.07

You purchased the Bonds at Par Value which is $5000

- Capital Gain = Selling Price - Purchase Price

Capital Gain = $4617.07 - $5000

**Capital Gain = -$382.93**

*If you need any clarification, you can ask in
comments. *

**If you like my answer, then please up-vote as it
will be motivating *** *

Suppose that you purchased a A rated $5,000 annual coupon bond
with an 6.1% coupon rate and a 8-year maturity at par value. The
current rate on 8-year US treasuries is 3%. Two years later, you
sell the bond, and for a yield of 4.787%, what was your capital
gain (+) or capital loss (-) in dollars and cents? (make your
answer positive for a gain, negative for a loss)

A $5,000 annual coupon
bond with an 5.8% coupon rate and a 7-year maturity at par value.
The current rate on 7-year US treasuries is 3%. Two
years later, you sell the bond, and for a yield of 7.328%, what was
your capital gain (+) or capital loss (-) in dollars and cents?

Suppose that you purchased a A rated $5000 annual coupon bond
with an 6.9% coupon rate and a 13-year maturity at par value. The
current rate on 13-year US treasuries is 3%. Two years later, you
look in the newspaper, and find that the yield on comparable debt
is 9.345%, how much is the bond currently worth?

Suppose that you purchased a Baa rated $1000 annual coupon bond
with an 8.1% coupon rate and a 9-year maturity at par value. The
current rate on 9-year US treasuries is 3%. Two years
later, you look in the newspaper, and find that the yield on
comparable debt is 6.892%, how much is the bond currently
worth?

Suppose that you purchased a Baa rated $1000 annual coupon bond
with an 7.8% coupon rate and a 19-year maturity at par value. The
current rate on 19-year US treasuries is 3%. Two years later, you
look in the newspaper, and find that the yield on comparable debt
is 7.080%, how much is the bond currently worth?

Suppose that you just purchased a Baa rated $1000 annual coupon
bond with an 5.3 % coupon rate and a 4 -year maturity. If the yield
to maturity on the bond is 6.495 %, how much did you pay?

A $5000 annual coupon bond with an 5.3% coupon rate and a
18-year maturity at par value. The current rate on 18-year US
treasuries is 3%. Two years later, you look in the
newspaper, and find that the yield on comparable debt is 7.152%,
how much is the bond currently worth?

Suppose you purchase a 8-year AAA-rated Swiss bond for par that
is paying an annual coupon of 8 percent and has a face value of
2,200 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At
the end of the year, the bond is downgraded to AA and the yield
increases to 10 percent. In addition, the SF depreciates to U.S.
$0.74074 for SF1.
a.
What is the loss or gain to a Swiss investor who holds this...

You have just purchased a 11-year zero-coupon bond with a yield
to maturity of 9% and a par value of $1,000. What would your rate
of return at the end of the year be if you sell the bond? Assume
the yield to maturity on the bond is 10% at the time you sell.

Suppose you purchase a 9-year AAA-rated Swiss bond for par that
is paying an annual coupon of 5 percent and has a face value of
1,900 Swiss francs (SF). The spot rate is U.S. $0.66667 for SF1. At
the end of the year, the bond is downgraded to AA and the yield
increases to 7 percent. In addition, the SF depreciates to U.S.
$0.74074 for SF1.
a.
What is the loss or gain to a Swiss investor who holds this...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 11 minutes ago

asked 12 minutes ago

asked 28 minutes ago

asked 28 minutes ago

asked 51 minutes ago

asked 53 minutes ago

asked 53 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago