Question

You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to...

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?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

P0=766.12

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
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to...
You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 3.4% (EAR). You keep the bond for 5 years before selling it. The price of the bond today is P0=F(1+r)T=1,0001.03410=P0=F(1+r)T=1,0001.03410= 715.8 If the yield to maturity is still 3.4% when you sell the bond at the end of year-5, what is your personal annual rate of return?
a. You own a 4-year, 5.1% annual coupon bond with $1,000 face value. If the yield...
a. You own a 4-year, 5.1% annual coupon bond with $1,000 face value. If the yield to maturity is 6.9%, what percentage of the bond's value comes from the present value of coupon payments? Answer in percent, rounded to one decimal place. b. Your company is undertaking a new investment opportunity and you would like to issue bonds to fund the project. Each bond will be a 5-year zero-coupon bond with a $1,000 face value. If the bonds are to...
Suppose you bought a 15-year $1,000 face-value bond for $945 one year ago. The annual coupon...
Suppose you bought a 15-year $1,000 face-value bond for $945 one year ago. The annual coupon rate is 7% and interest payments are paid annually. If the price today is $995, the yield to maturity must have changed from _____________ to ______________. 8.12%; 6.94% 7.12%; 8.11% 7.63%; 7.06% 9.11%; 9.35% None of the above
A 5-year zero coupon bond pays 10% annual coupons, and has a face value of $1,000....
A 5-year zero coupon bond pays 10% annual coupons, and has a face value of $1,000. Zero coupon bonds with 1-5 years to maturity, each with a face value of $100, have the following prices: Price of 1-year zero = $99.14 Price of 2-year zero = $97.88 Price of 3-year zero = $96.32 Price of 4-year zero = $89.44 Price of 5-year zero = $87.76 What is the price of the 5-year coupon bond?
You are purchasing a 20-year, zero-coupon bond. The annual yield to maturity is 9.80 percent and...
You are purchasing a 20-year, zero-coupon bond. The annual yield to maturity is 9.80 percent and the face value is $1,000. What is the current market price? Assume (r) is bi-annual for compounding purposes in case of zero-coupon bond.
in 2015 you bought $1,000 face value bond. 20 year maturity. 7% coupon. in 2020 you...
in 2015 you bought $1,000 face value bond. 20 year maturity. 7% coupon. in 2020 you sell. bond has 9% coupon. what is value in 2020? formula please also
A bond pays an annual coupon on a face value of $1,000. The bond is currently...
A bond pays an annual coupon on a face value of $1,000. The bond is currently trading at $950 and its yield is 7%. I buy the bond today and sell it immediately after I receive the next coupon one year from now, at which time its yield is still 7%. If my capital gain is 5%, then what is the bond's coupon rate?
a) What is the value of a 6-year, 7.7% coupon, $1,000 face value bond that pays...
a) What is the value of a 6-year, 7.7% coupon, $1,000 face value bond that pays quarterly coupons, if its yield to maturity is 2.8%? Round to the nearest cent. b) You own a 17-year, 3.8% annual coupon bond with $1,000 face value. If the yield to maturity is 8.5%, what percentage of the bond's value comes from the present value of coupon payments? Answer in percent, rounded to one decimal place. c) Your company is undertaking a new investment...
5. SupPose you buy a five-year zero-coupon Treasury bond for $800 per $1,000 face value. Answer...
5. SupPose you buy a five-year zero-coupon Treasury bond for $800 per $1,000 face value. Answer the following questions: (a) What is the yield to maturity (annual compounding) on the bond? (b) Assume the yield to maturity on comparable zeros increases to 7% immediately after purchasing the bond and remains there. Calculate your annual return (holding period yield) if you sell the bond after one year. (c) Assume yields to maturity on comparable bonds remain at7%, calculate your annual return...
Suppose you purchase a zero-coupon bond (coupon = 0%) with a face value of $1,000 and...
Suppose you purchase a zero-coupon bond (coupon = 0%) with a face value of $1,000 and a maturity of 25 years, for $200. If the yield to maturity on the bond remains unchanged, what will the price of the bond be 5 years from now? $800.00 $253.64 $297.58 $275.95 $267.52
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT