Question

Determine the yield to maturity of an 8-year zero coupon bond ($1,000 par value) that is currently selling for $521. (Input your answer as a whole number. For example: 6.25% = 6.25)

Answer #1

Yield to maturity of zero coupn bond can be calculated by using present value formula | |||||

because price of the zero coupon bond is equal to present value of its maturity amount which is $1000 | |||||

PV= FV/(1+r)^n | |||||

Where, | |||||

FV= Future Value | |||||

PV = Present Value | |||||

r = Interest rate | |||||

n= periods in number | |||||

521= $1000/( 1+r)^8 | |||||

521/1000 =1/(1+r)^8 | |||||

0.521=1/(1+r)^8 | |||||

r =8.49% | |||||

Correct Answer = 8.49% |
|||||

A zero-coupon bond has a yield to maturity of 8% and a par value
of $1,000. If the bond matures in 8 years, at what price should the
bond sell today?
a) $501.90
b) $555.28
c) $573.88
d) $540.30

Find the yield to maturity for a 15-year, 8% annual coupon rate,
$1,000 par value bond if the bond sells for $1,218 currently? We
assume that interest is paid on this bond annually.
2.90%
5.79%
6.64%
6.86%
Using the information from above, calculate the bond’s current
yield.
6.20%
6.57%
6.80%
7.18%
Using the information from Question 43 and 44, calculate the
bond’s capital gain yield.
-0.78%
0.78%
6.22%
6.57%

What is the yield to maturity for a $1,000 par, 20 year, 8%
coupon bond with semiannual payments, callable in 3 years for
$1,050 that sells for $907.99?

1. What is the duration of a 10-year zero-coupon bond with a par
value of $1,000?
2. An investor has a 15-year maturity, 8% coupon, 8% yield bond
with a duration of 10 years and a convexity of 135.5. If the
interest rate were to fall 75 basis points, what is your predicted
new price for the bond (including convexity)?

What is the yield to maturity of a 6.6% coupon rate, $1,000 par
value bond which is currently priced at $1,043 with 8 years to
maturity?
A. 6.17%
B. 5.92
C. 5.39%
D. 5.91%

18. Compute the yield to maturity of a $2,500 par value bond
with a coupon rate of 7.8% (quarterly payments - that is, four
times per year) that matures in years. The bond is currently
selling for $3,265
19. What is the yield to maturity of a $ par value bond with a
coupon rate of 9.5% (semi-annual coupon payments) that matures in
28 years assuming the bond is currently selling for
$838.137
par
value 1000

A 25-year, $1,000 par value zero-coupon rate bond is to be
issued to yield 8 percent. Use Appendix B for an approximate answer
but calculate your final answer using the formula and financial
calculator methods.
a. What should be the initial price of the bond? (Assume annual
compounding. Do not round intermediate calculations and round your
answer to 2 decimal places.)
b. If immediately upon issue, interest rates dropped to 7
percent, what would be the value of the zero-coupon...

1. A 9-year zero coupon bond has a yield to maturity of
11.8 percent, and a par value of $1,000. What is the
price of the bond?
2. A 7-year bond has a 8 percent coupon rate with the interest
paid in semi annual payments. The yield to maturity of
the bond is 2.3 percent, and a face value of
$1,000. What is the price of the bond?
3. A 12-year bond has a 9 percent annual coupon, a yield to
maturity of...

The yield to maturity of a one year zero coupon bond is 4 % p.
a. and the yield to maturity for a two year zero coupon bond is 5 %
p. a. If the par value of a 10% coupon bond (coupons paid annually)
is $1,000 and it matures in two years its price will be:"
"$1,093.89 "
"$1,078.92 "
"$1,068.23 "
"$1,055.12 "

43.Find the yield to maturity for a 15-year, 8% annual coupon
rate, $1,000 par value bond if the bond sells for $1,218 currently?
We assume that interest is paid on this bond annually.
2.90%
5.79%
6.64%
6.86%
Using the information from Question 43, calculate the bond’s
current yield.
6.20%
6.57%
6.80%
7.18%
Using the information from Question 43 and 44, calculate the
bond’s capital gain yield.
-0.78%
0.78%
6.22%
6.57%

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