Question

What is the price of a 4-year bond with a coupon rate of 10% and face value of $1,000? Assume the bond is trading at 10% yield, and that coupons are paid semi-annually. Assume semi-annual compounding.

Round your answer to the nearest cent (2 decimal places).

What is the yield of a 3-year bond with a coupon rate of 9% and face value of $100? Assume the bond is currently trading at a price of $100, and that coupons are paid semi-annually. Assume semi-annual compounding.

Round your answer to 4 decimal places. For example if your answer is 3.205%, then please write down 0.0321.

Answer #1

Sol:

**Calculation of Bond
Price:**

Here,

C = coupon rate = 1000 * 10/100 = 100

K_{d} = Yield rate = 10%

M = maturity value or face value = $1000

n = periods = 4

Bond price =

= **C / 2 x PVIFA(K _{d/2 %,}_{2n}) + M x
PVIF (K_{d/2 % , 2n} )** [PVIFA = Present Value
Interest Factor of Annuity]

= 100/2 x PVIFA(K_{10/2 %,}_{2*4}) + $1000 x
PVIF (K_{10/2 % , 2*4} ) [ PVIF = Present Value Interest
Factor]

= 50 x PVIFA(K _{5%,}_{8}) + $1000 x
PVIF (K _{5 % , 8} )

= 50 x 6.46 + $1000 x 0.68

= $1003

**Calculation Of
Bond Yield:**

Here,

C = coupon rate = 100 * 9/100 = 9

Coupon rate semi annually = 9/2= 4.5

Current price = $100

M = maturity value or face value = $100

**Bond Yield = Annual Interest or coupon rate(Semi annual)
/ Current market price**

= 4.5 / $100

= 0.045 or 4.5 %

Consider a corporate bond with a face value of $1,000, 2 years
to maturity and a coupon rate of 4%. Coupons are paid
semi-annually. The next coupon payment is to be made exactly 6
months from today. What is this bond's YTM assuming the following
spot rate curve. 6-month spot rate: 4%. 12-month: 5%. 18-month:
5.5%. 24-month: 6%. Assume semi-annual compounding. Round your
answer to 4 decimal places. For example if your answer is 3.205%,
then please write down 0.0321.

Consider a corporate bond with a face value of $1,000, 2 years
to maturity and a coupon rate of 5%. Coupons are paid
semi-annually. The next coupon payment is to be made exactly 6
months from today. What is this bond's YTM assuming the following
spot rate curve. 6-month spot rate: 4%. 12-month: 5%. 18-month:
5.5%. 24-month: 8%. Assume semi-annual compounding. Round your
answer to 4 decimal places. For example if your answer is 3.205%,
then please write down 0.0321.

16. A 10-year bond, $100 face value bond with a 8% coupon rate
and semi-annual coupons has a yield maturity of 5%. The bond should
be trading at a price of $.___ Round to the nearest cent.
17. XYZ company has just issued a 30-year bond with a coupon
rate of %7.5 (annual coupon payments) and a face value of $1,00. If
the yield to maturity is 11%, what is the price of the bond. Round
to the nearest cent....

Consider a 5-year, 5% annual coupon $1000 par bond currently
trading at $950. Suppose that the bond is putable in 2 years at
par. What is the bond's yield to first put?
Assume annual compounding. Round your answer to 4 decimal
places. For example if your answer is 3.205%, then please write
down 0.0321.

a 10-year bond, $1,000 face value bond with a 8% coupon rate and
semi-annual coupons has a yield to maturity of 12%. the bond should
be trading at the price of? round to nearest cent

Assume semi-annual compounding. We know that 6-month T-bill is
trading at a yield of 2%; 12-month T-bill is trading at a yield of
2.5%; 3%-coupon 18-month T-note is trading at par ($100);
3.4%-coupon 2-year T-note is trading at par ($100). With the above
information, compute the 2-year spot rate. Assume semi-annual
compounding. Round your answer to 4 decimal places. For example if
your answer is 3.205%, then please write down 0.0321.

a treasury bond has an annual coupon rate of 5% that is paid
semi-annually. the Face Value of the bond is $1000 and it has 10
years to maturity with a yield to maturity of 6% (expressed as an
apr with semi annual compounding) commpute the price of the
bond.

Below is a list of prices for $1,000-par zero-coupon Treasury
securities of various maturities. An 12% coupon $100 par bond pays
an semi-annual coupon and will mature in 1.5 years. What should be
the YTM on the bond? Assume semi-annual interest compounding for
this question. Round your answer to 4 decimal places. For example
if your answer is 3.205%, then please write down 0.0321. Maturity
(periods) Price of $1,000 par bond 1 943.4 2 873.52 3 770

Consider a corporate bond with a face value of $1,000, 2 years
to maturity and a coupon rate of 5%. Coupons are paid
semi-annually. The next coupon payment is to be made exactly 6
months from today. What is this bond's price assuming the following
spot rate curve. 6-month spot rate: 3.1%. 12-month: 5%. 18-month:
5.5%. 24-month: 5.8%. Assume semi-annual compounding. Round your
answer to the nearest cent (2 decimal places).

Suppose a 10-year, $1,000 bond with an 8.8% coupon rate and
semi-annual coupons is trading for a price of $1,035.81.
a. What is the bond's yield to maturity (expressed as an APR
with semi-annual compounding)?
b. If the bond's yield to maturity changes to 9.1% APR, what
will the bond's price be?

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