Question

A bond has a $1,000 par value, 10 years to maturity, and pays a coupon of...

A bond has a $1,000 par value, 10 years to maturity, and pays a coupon of 7.0% per year, semiannually. You expect the bond’s yield to maturity to decrease to 6.5% per year in two years. If you buy the bond today for $987.75 and sell it in two years, what is the annual return on your investment?

Question 9 options:

A)

 9.42%

B)

 9.12%

C)

 8.96%

D)

 8.74%

E)

 9.04%
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Calc:

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 $1,000 par value, ten years to maturity, and pays a coupon of...
A bond has a $1,000 par value, ten years to maturity, and pays a coupon of 6.0% per year, semiannually. If the bond’s required return is 5.7% per year, what is its current yield? Question 5 options: A) 5.87% B) 5.76% C) 5.82% D) 6.00% E) 5.94%
A bond has a $1,000 par value, 19 years to maturity, and pays a coupon of...
A bond has a $1,000 par value, 19 years to maturity, and pays a coupon of 5.75% per year, semiannually. The bond can be called in four years at $1,085. If the bond’s current yield is 5.54% per year, what is its yield to call? Question 10 options: A) 6.82% B) 6.76% C) 6.61% D) 6.91% E) 6.56%
A bond has a $1,000 par value, 16 years to maturity, and pays a coupon of...
A bond has a $1,000 par value, 16 years to maturity, and pays a coupon of 6.0% per year, annually. The bond can be called in seven years at $1,150. If the bond’s yield to maturity is 6.39% per year, what is its yield to call? Question 2 options: A) 8.68% B) 8.87% C) 8.11% D) 8.41% E) 7.87%
bond has a $1,000 par value, 14 years to maturity, and pays a coupon of 8.25%...
bond has a $1,000 par value, 14 years to maturity, and pays a coupon of 8.25% per year, annually. The bond can be called in seven years at $1,045. If the bond’s current yield is 8.52% per year, what is its annual yield to maturity? Question 7 options: A) 8.38% B) 8.42% C) 8.65% D) 8.58% E) 8.49%
q1 - A coupon bond that pays interest semiannually has a par value of $1,000, matures...
q1 - A coupon bond that pays interest semiannually has a par value of $1,000, matures in 5 years, and has a yield to maturity of 6.5%. If the coupon rate is 3.5%, the intrinsic value of the bond today will be Q-2 you purchased s coupon bond at a price of 1059. the coupon rate for the bond is 5% with a face value of 1000. you sold the bond at 1066.13 one year later. how much us one...
A bond with seven years to maturity pays a 5.5% coupon semiannually. The par value of...
A bond with seven years to maturity pays a 5.5% coupon semiannually. The par value of the bond is $1,000 and the current price is $971.76. a) If you bought the bond today, what yield to maturity would you earn if you held it to maturity? b) If you sold it for $986.22 in one year, what would your total return be? Assume you collect both coupon payments.
General Mills has a $1,000 par value, 10-year to maturity bond outstanding with an annual coupon...
General Mills has a $1,000 par value, 10-year to maturity bond outstanding with an annual coupon rate of 7.89 percent per year, paid semiannually. Market interest rates on similar bonds are 11.30 percent. Calculate the bond’s price today.
A $1,000 par value bond with 5 years left to maturity pays an interest payment semiannually...
A $1,000 par value bond with 5 years left to maturity pays an interest payment semiannually with a 8 percent coupon rate and is priced to have a 5.5 percent yield to maturity. If interest rates surprisingly change by 0.27 percent, by how much would the bond’s price change?
A. A bond has a par value of $1,000, a time to maturity of 20 years,...
A. A bond has a par value of $1,000, a time to maturity of 20 years, and a coupon rate of 7.50% with interest paid annually. If the current market price is $750, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.) B. Suppose that today’s date is April 15. A bond with a 8% coupon...
A bond with 10 years to maturity has an annual coupon rate of 4.1% and pays...
A bond with 10 years to maturity has an annual coupon rate of 4.1% and pays interest semiannually. Assume that today we are 57 days into the current 183-day coupon payment period, and the required rate of return is 7.8%. What is the flat price that would be quoted by a dealer on this bond, per $100 of par value? please show the problem on excel. Thank you.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT