Question

Consider a one-year maturity, $120,000 face value bond that pays a 10 percent fixed coupon annually.

- What is the price of the bond if market interest rates are 7 percent?
- What is the price of the bond if market interest rates are 5 percent?
- What is the percentage price change for the bond if interest rates increase 70

basis points from the original 6 percent?

Answer #1

Consider a 10 year bond with face value $1,000, pays 6% coupon
annually and has a yield-to-maturity of 7%. How much would the
approximate percentage change in the price of bond if interest rate
in the economy decreases by 0.80% per year?
increase by 5.55%
increase by 5.55%
increase by 5.98%
decrease by 5.98%

6. Consider a 10 year bond with face value $1,000 that pays a
6.8% coupon semi-annually and has a yield-to-maturity of 8.4%. What
is the approximate percentage change in the price of bond if
interest rates in the economy are expected to decrease by 0.60% per
year? Submit your answer as a percentage and round to two decimal
places. (Hint: What is the expected price of the bond before and
after the change in interest rates?)

A 10-year, 7 percent coupon bond pays interest semiannually. The
bond has a face value of $1,000. What is the percentage change in
the price of this bond if the market yield to maturity rises to 6
percent from the current rate of 5.5 percent?

Consider a 12-year bond with face value $1,000 that pays an 8.6%
coupon semi-annually and has a yield-to-maturity of 7.7%. What is
the approximate percentage change in the price of bond if interest
rates in the economy are expected to decrease by 0.60% per year?
Submit your answer as a percentage and round to two decimal places.
(Hint: What is the expected price of the bond before and after the
change in interest rates?)

A five-year bond pays annual coupon payments of 10%. The face
value of the bond is $1,000 and has a current market price of
$1,079.85. The current yield to maturity is 8%. (15m) Calculate the
Duration (D) of this bond by completing the table below. Show all
working. Suppose that the interest rates increased by 75 basis
points as of today. Calculate the percentage and dollar amount
change in the price of the bond. Calculate the new price of the...

A 13-year, 6 percent coupon bond pays interest semiannually. The
bond has a face value of $1,000. What is the percentage change in
the price of this bond if the market yield to maturity rises to 5.7
percent from the current rate of 5.5 percent?

Bonds are priced per $100 face value
1) Consider a 10-year 6 percent coupon bond.
a) What is the price of this bond if the market yield is 6%?
b) What is the price of this bond if the market yield is 7%?
c) What is the price of this bond if the market yield is 5%?
2) Consider a 20-year 6 percent coupon bond.
a) What is the price of this bond if the market yield is 6%?
b)...

Consider a 10 year bond which pays 6% coupon annually and has a
yield-to-maturity of 7%. How much would the price of bond change if
investors required return increases to 8% per year? increase by
approximately $54 decrease by approximately $52 decrease by
approximately $64 increase by approximately $64

1.A 12-year bond has a 9 percent annual coupon, a yield to
maturity of
11.4 percent, and a face value of $1,000. What is the price of the
bond?
2.You just purchased a $1,000 par value, 9-year, 7 percent
annual coupon bond that pays interest on a semiannual basis. The
bond sells for $920. What is the bondâ€™s nominal yield to
maturity?
a. 7.28%
b. 8.28%
c. 9.60%
d. 8.67%
e. 4.13%
f. None of
the above
3.A bond with...

1.A Corporate bond has an 8.50 percent coupon and pays interest
annually. The face value is $1,000 and the current market price is
$940. The bond matures in 21 years. What is the yield to
maturity?
How much are you willing to pay for one share of stock if the
company just paid an $.80 annual dividend, the dividends increase
by 5.5 percent annually and you require a 9 percent rate of
return?

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