Question

An annual bond has a maturity of 20 years, a coupon rate of 8% and a...

An annual bond has a maturity of 20 years, a coupon rate of 8% and a yield of 8%. What will be the rate of return on the bond over the next year if the yield unexpectedly drops to 6% at the end of the year? Enter your answer as a percentage point, round it to two decimal points, and do not include the % sign (i.e., if the answer is 5.1234%, enter it as 5.12).

Numeric response for this question?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A bond has a maturity date of 5 years, an annual coupon rate of 10% and...
A bond has a maturity date of 5 years, an annual coupon rate of 10% and an annual yield of 14%. If the coupon payments are monthly, what is the current price of the bond? Round your answer to the nearest dollar; do not include the $ sign (i.e., if the answer is $987.5432, enter it as 987).
1. A 3-year annual coupon bond has a yield to maturity of 8%, coupon rate of...
1. A 3-year annual coupon bond has a yield to maturity of 8%, coupon rate of 5%. The face value of the bond is $1,000. a. What is the price of the bond? Is it premium bond or discount bond? b. Suppose one year later immediately after you receive the first coupon payment, the yield to maturity drops to 7%. What would be your holding period return if you decide to sell the bond at the market price then? c....
CraMerica has 8% coupon bond issue with 8 years to maturity. Each of these bonds make...
CraMerica has 8% coupon bond issue with 8 years to maturity. Each of these bonds make semi-annual interest payments. These bonds have a yield to maturity of 10%. Suddenly, the yield to maturity on these bonds fall to 8%. What is the percentage change in the price of these bonds. Assume a par value of $1,000. Enter your answer to two decimal plances with no percentage sign. That is, like this: 13.61
CraMerica has 8% coupon bond issue with 8 years to maturity. Each of these bonds make...
CraMerica has 8% coupon bond issue with 8 years to maturity. Each of these bonds make semi-annual interest payments. These bonds have a yield to maturity of 10%. Suddenly, the yield to maturity on these bonds fall to 8%. What is the percentage change in the price of these bonds. Assume a par value of $1,000. Enter your answer to two decimal plances with no percentage sign. That is, like this: 13.61
A zero coupon bond has a maturity of 11 years. If the annual yield to maturity...
A zero coupon bond has a maturity of 11 years. If the annual yield to maturity is 8.1%, what is the current price of this bond? (Answer to the nearest penny, i.e. 999.99 but do not use a $ sign)
Bond X is noncallable and has 20 years to maturity, a 8% annual coupon, and a...
Bond X is noncallable and has 20 years to maturity, a 8% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8%. How much should you be willing to pay for Bond X today? (Hint: You will need to...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 9%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8%. How much should you be willing to pay for Bond X today? (Hint: You will need to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 7% has duration...
A 30-year maturity bond making annual coupon payments with a coupon rate of 7% has duration of 15.16 years and convexity of 315.56. The bond currently sells at a yield to maturity of 5%.     a. Find the price of the bond if its yield to maturity falls to 4% or rises to 6%. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)       Yield to maturity of 4% $       Yield to maturity of 6%...
14. (Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of...
14. (Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 5%, and annual payments has a yield to maturity of 4.3%. What will be the percentage change in the bond price if the yield changes instantaneously to 5%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.)
(Bonds) A bond with a $1,000 par, 5 years to maturity, a coupon rate of 5%,...
(Bonds) A bond with a $1,000 par, 5 years to maturity, a coupon rate of 5%, and annual payments has a yield to maturity of 3.4%. What will be the percentage change in the bond price if the yield changes instantaneously to 5.8%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.) Please and thanks
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT