Question

1. A 12-year semiannual bond with a coupon rate of 6% has a face value of $1,000 and a YTM of 7%. The price of the bond is

A. 912.85. B. 914.25. C. 916.36. D. 919.71 E. 920.57

2. A 4-year discount bond with a face value of $1,000 sells at $915. The YTM of the bond is

A. 2.24%. B. 2.52% C. 2.83% D. 3.21% E. 3.48%

3. A 7-year semiannual bond with a face value of $1,000 and a coupon rate of 8% sells at $974. The YTM of the bond is

A. 4.3% B. 5.5% C. 6.5% D. 7.2% E. 8.5%

4. Consider a 20-year semiannual bond with a face value of $1,000, coupon rate of 6.5% and a market price of $1,014.72. The bond is callable in 4 years at the price of $1,050. The yield to call of this bond is

A. 6.4% B. 6.8% C. 7.2% D. 7.6% E. 8.2%

5. Consider a bond with a YTM of 5.5% that sells at $970. If the yield falls to 5% the bond’s new price will be $1,004. The duration of this bond is

A. 5.5 years B. 6.2 years C. 6.9 years D. 7.4 years E. 7.8 years

6. A pension plan is obligated to make disbursements of $3 million in 2 years, $5 million in 3 years, $7 million in 4 years, and $8 million in 5 years. Find the duration of this plan’s obligations if the interest rate is 6%.

A. 2.5 years B. 3.2 years C. 3.6 years D. 3.8 years E. 4.3 years

7. Consider a 15-year semiannual bond with a 5% coupon rate. What is the bond’s duration if its YTM is 4.5%?

A. 9.7 years B. 10.9 years C. 11.5 years D. 12.1 years E. 12.6 years

Answer #1

1)

1. A semiannual coupon bond with a coupon rate of 7% and face
value of $1000 trades at $1250. It matures in 12 years. What is its
yield to maturity (YTM)? Answer in percent and round to two decimal
places.
2. A 5 year semiannual coupon bond with a face value of $1,000
trades at $902. The market-determined discount rate is 7%. What is
the coupon rate? Answer in percent and round to two decimal
places.

An 8% semiannual coupon bond matures in 5 years. The bond has a
face value of $1,000 and a current yield of 8.21%. What are the
bond’s price and YTM?
calculate using a financial calculator

1. Maturity (years) = 5 Face Value = $1,000 Coupon Rate = 3.00%
Price = $900 Coupon (Annual)
What is the YTM (annual) of the above bond?
A 5.38%
B 5.30%
C 5.33%
D 4.80%
E 5.36%
2. Consider a bond with the following features: Maturity = 7
years Face value = $1,000 Coupon rate = 4% Semiannual coupons Price
= $993
What is this bond's YTM stated as an annual rate?
A 3.2500%
B 4.1161%
C 2.0581%
D 6.500%

An 8% semiannual coupon bond matures in 6 years. The bond has a
face value of $1,000 and a current yield of 8.3977%. What are the
bond's price and YTM? (Hint: Refer to Footnote 6 for the definition
of the current yield and to Table 7.1) Do not round intermediate
calculations. Round your answer for the bond's price to the
nearest cent and for YTM to two decimal places.
Bond’s price: $ =
YTM: =

A 7% semiannual coupon bond matures in 6 years. The bond has a
face value of $1,000 and a current yield of 7.7242%. What are the
bond's price and YTM?

In Excel with formulas--
A 10-year, 12 % semiannual coupon bond with a par value of
$1,000 may be called in 7 years, at a call price of $1,100. The
bond sells for $1,500. (Assume the bond has just been
issued).
a. What is the bond’s yields to maturity?
b. What is the bond’s current yield?
c. What is the bond’s capital gain or loss yield in the first
year?
d. What is the bond’s yield to call?

a) An HSBC bond has a face value of 1000, a coupon rate of 8%, 3
years until maturity and a yield to maturity of 7%. Calculate bond
duration. D= ? *[cash flowt/(1+YTM)t]}/price of bond where t is
time to maturity and YTM stands for yield to maturity. N.B: You
need to show how you have calculated duration. A single value will
not suffice.
b) HSBC has issued a 9-year bond with YTM of 10% and duration of
7.194 years....

Bond A has a face value of $1,000, makes semiannual coupon
payments of $30 and will mature in 7 years. It currently sells for
$949.63. Bond B is a corporate bond whose price is quoted at 109.98
this afternoon. It will mature in exactly 15 years. Bonds A and B
are priced so that they each have the same yield. What is the YTM
for these two bonds, and what is the coupon rate for Bond B?

A
bond that matures in 6 years sells for $950. The bond has a face
value of $1,000 and a 5.5% annual coupon. What is the bond’s yield
to maturity, YTM?

A 25-year semiannual bond has 10% coupon rate and par value
$1,000. The current YTM of the bond is 10%. Its Macaulay duration
is 9.58 years and convexity is 141.03.
(1) What is the bond’s modified duration? (2 points)
(2) What is the percentage price change if interest rate were to
fall 125 basis points considering both duration and convexity? (4
points)
(3) What is the estimated price with 125 basis points decrease
in yield? (4 points)

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