Question

You buy a bond with a $1,000 par value today for a price of $890. The...

You buy a bond with a $1,000 par value today for a price of $890. The bond has 6 years to maturity and makes annual coupon payments of $78 per year. You hold the bond to maturity, but you do not reinvest any of your coupons. What was your effective EAR over the holding period?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You buy an 7-year $1,000 par value bond today that has a 5.50% yield and a...
You buy an 7-year $1,000 par value bond today that has a 5.50% yield and a 5.50% annual payment coupon. In 1 year promised yields have risen to 6.50%. Your 1-year holding-period return was ___.
You buy a bond with a par value of $1000 and a coupon rate of 8%...
You buy a bond with a par value of $1000 and a coupon rate of 8% with 18 coupons remaining. You hold the bond and receive 11 coupons. If the bond had a YTM of 8.2% when you bought it and 9.1% when you sold it, what was your annual holding period ROR?
You buy an 7-year $1,000 par value bond today that has a 5.60% yield and a...
You buy an 7-year $1,000 par value bond today that has a 5.60% yield and a 5.60% annual payment coupon. In 1 year promised yields have risen to 6.60%. Your 1-year holding-period return was ___. Multiple Choice 0.77% –4.83% 1.54% –2.69%
2. Today, a bond has a coupon rate of 8.4 percent, par value of 1,000 dollars,...
2. Today, a bond has a coupon rate of 8.4 percent, par value of 1,000 dollars, YTM of 4.82 percent, and semi-annual coupons with the next coupon due in 6 months. One year ago, the bond’s price was 1,041.94 dollars and the bond had 17 years until maturity. What is the current yield of the bond today? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. 3....
​(Bond valuation​) At the beginning of the​ year, you bought a ​$ 1,000 par value corporate...
​(Bond valuation​) At the beginning of the​ year, you bought a ​$ 1,000 par value corporate bond with an annual coupon rate of 14 percent and a maturity date of 15 years. When you bought the​ bond, it had an expected yield to maturity of 16 percent. Today the bond sells for ​$ 1,000. a. What did you pay for the​ bond? b. If you sold the bond at the end of the​ year, what would be your​ one-period return...
One year ago, you bought a bond at a price of $992.6000.The bond pays coupons semi-annually,...
One year ago, you bought a bond at a price of $992.6000.The bond pays coupons semi-annually, has a coupon rate of 6% per year, a face value of $1,000 and would mature in 5 years. Today, the bond just paid its coupon and the yield to maturity is 8%. What is your holding period return in the past year? (suppose you did not reinvest coupons)
suppose you invest in two year treasury bill with a coupon of 5% and $1000 par....
suppose you invest in two year treasury bill with a coupon of 5% and $1000 par. Suppose that you buy this bond at a price of exactly $1000. you intend to hold the bond to maturity and reinvest the coupons until the bond matures . you expect to reinvest the coupons in an account that pays an APR of 2.25% with semi annual compounding . calculate EAY effective interest rate
Suppose that you invest in a two-year Treasury bond with a coupon rate of 7% and...
Suppose that you invest in a two-year Treasury bond with a coupon rate of 7% and $1,000 par. Suppose that you buy this bond at a price of exactly $1,000. You intend to hold this bond to maturity and reinvest the coupons until the bond matures. You expect to reinvest the coupons in an account that pays an APR of 1.26%, with semi-annual compounding. What is the effective annual rate of return on your investment? Hint: see Example 8 in...
PART 2 - BOND CALCULATIONS a) What is the price of a $1,000 par value, semi-annual...
PART 2 - BOND CALCULATIONS a) What is the price of a $1,000 par value, semi-annual coupon bond with 16 years to maturity, a coupon rate of 5.40% and a yield-to-maturity of 5.90%? b) What is the price of a $1,000 par value, 10 year, annual coupon bond with a 5.80% coupon rate and a yield to maturity of 5.50% c) A 10-year, 6.30% semi-annual coupon bond today and the current market rate of return is 5.60%. The bond is...
Suppose you buy a bond with a coupon of 7.1 percent today for $1,000. The bond...
Suppose you buy a bond with a coupon of 7.1 percent today for $1,000. The bond has 16 years to maturity. Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell. What is the percentage realized rate of return? Assume that interest payments are reinvested at the original YTM. The bond pays coupons twice a year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT