Question

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?

Answer #1

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?

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?

18. Compute the yield to maturity of a $2,500 par value bond
with a coupon rate of 7.8% (quarterly payments - that is, four
times per year) that matures in years. The bond is currently
selling for $3,265
19. What is the yield to maturity of a $ par value bond with a
coupon rate of 9.5% (semi-annual coupon payments) that matures in
28 years assuming the bond is currently selling for
$838.137
par
value 1000

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)

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 10-year corporate bond has an annual coupon payment of 5.3%.
The bond is currently selling at par ($1,000). Which of the
following statement is not correct? Why?
The bond’s capital gain yield is 5.3%.
The bond’s yield to maturity is 5.3%.
The bond’s current yield is 5.3%.
If the bond’s yield to maturity remains constant, the bond’s
price will remain at par.

A $ 5000 bond with a coupon rate of 5.3% paid semiannually has
two years to maturity and a yield to maturity of 8%. If interest
rates rise and the yield to maturity increases to 8.3%, what will
happen to the price of the bond?

What is the coupon rate for a par value bond with ten years
until maturity, annual compounding, a current price of $1,280.95,
and a yield to maturity of 7%?

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