Question

The yield to maturity of a one year zero coupon bond is 4 % p. a. and the yield to maturity for a two year zero coupon bond is 5 % p. a. If the par value of a 10% coupon bond (coupons paid annually) is $1,000 and it matures in two years its price will be:"

"$1,093.89 " |
||

"$1,078.92 " |
||

"$1,068.23 " |
||

"$1,055.12 " |

Answer #1

The yield-to-maturity (YTM) on one-year bond with zero coupon
and face value $ 1000 is 5 %. The YTM on two-year bond with 5 %
coupon paid annually and face value $ 1000 is 6 %. (i) What are the
current prices of these bonds? (ii) Find Macaulay durations of
these bonds. Consider a third bond which is a zero coupon two-year
bond with face value $ 1000. (iii) What must be the price of the
third bond so that...

1. A 9-year zero coupon bond has a yield to maturity of
11.8 percent, and a par value of $1,000. What is the
price of the bond?
2. A 7-year bond has a 8 percent coupon rate with the interest
paid in semi annual payments. The yield to maturity of
the bond is 2.3 percent, and a face value of
$1,000. What is the price of the bond?
3. A 12-year bond has a 9 percent annual coupon, a yield to
maturity of...

A zero-coupon bond has a yield to maturity of 8% and a par value
of $1,000. If the bond matures in 8 years, at what price should the
bond sell today?
a) $501.90
b) $555.28
c) $573.88
d) $540.30

Question 1 of 71
The yield to maturity on a coupon bond is …
· always greater than the
coupon rate.
· the rate an investor
earns if she holds the bond to the maturity date, assuming she can
reinvest all coupons at the current yield.
· the rate an investor earns
if she holds the bond to the maturity date, assuming she can
reinvest all coupons at the yield to maturity.
· only equal to the internal
rate of return of a bond...

5a- Compute the yield to maturity for a zero coupon bond with a
maturity of 14 years and a face value of $1000. The bond is selling
for $519.52. (Assume annual discounting.) (Round to 100th of a
percent and enter as a percentage, e.g. 12.34% as 12.34)
Answer:
5b- Compute the current yield on a bond with a yield to maturity
of 10.3%, a par value of $1000, a coupon rate of 6.0% paid
semi-annually, a remaining life of 18...

You purchase a zero coupon bond with 22 years to maturity and a
yield to maturity of 5.49 percent. The bond has a par value of
$1,000. What is the implicit interest for the first year? Assume
semiannual compounding

The zero coupon bond yield curve shows that the one-, two-, and
three-year interest rates are 5.0%, 6.3%, and 8.4%, respectively.
What is the price of a three-year bond with a face value of $700
and coupons of 12% paid annually
? (a) $703.89 (b) $549.55 (c) $764.48 (d) $698.53 (e)
$769.84

a. Consider a coupon bond that pays interest of $60 annually,
has a par value of $1,000, matures in 2 years, and is selling today
at a price of $1000. What is the yield to maturity on this
bond?
b. Consider a zero-coupon bond with a par value of $1,000 that
costs $500 and matures in ten years. What is the yield to maturity
on this bond? Give the formula, and solve.
c. For the bond in part (b) above,...

A bond with a 3-year maturity has a coupon rate of 6% and a face
value of $1,000. The coupons are paid annually and the next coupon
is due in one year. The bond’s yield to maturity is 9%. What is its
Macaulay Duration?

You bought a 10-year zero-coupon bond with a face value of
$1,000 and a yield to maturity of 2.7% (EAR). You keep the bond for
5 years before selling it. The price of the bond today is P 0 = F (
1 + r ) T = 1,000 1.027 10 = 766.12
If the yield to maturity is still 2.7% when you sell the bond at
the end of year-5, what is your personal ANNUAL rate of return?

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