Question

1. Maturity (years) = 5 Face Value = $1,000 Coupon Rate = 3.00% Price = $900 Coupon (Annual)

What is the YTM (annual) of the above bond?

A 5.38%

B 5.30%

C 5.33%

D 4.80%

E 5.36%

2. Consider a bond with the following features: Maturity = 7 years Face value = $1,000 Coupon rate = 4% Semiannual coupons Price = $993

What is this bond's YTM stated as an annual rate?

A 3.2500%

B 4.1161%

C 2.0581%

D 6.500%

Answer #1

1. Future value= $1,000

Time= 5 years

Present value= $900

Coupon payment= 3% 0.03*1,000= $30

The yield to maturity is calculated using a financial calculator by entering the below:

FV= 1,000; PV= 900; N= 5; PMT= 30

Press CPT and I/Y to calculate the yield to maturity

The yield to maturity of the bond is **5.33%.**

2. Future value= $1,000

Time= 7 years*2= 14 semi-annual periods

Present value= $933

Coupon payment= 4% /2= 2% 0.02*1,000= $20

The yield to maturity is calculated using a financial calculator by entering the below:

FV= 1,000; PV= 933; N= 14; PMT= 20

Press CPT and I/Y to calculate the yield to maturity

The yield to maturity of the bond is 2.58%
semi-annually**.** 2.58*2= **5.16** per
annum.

Bond Features
Maturity (years) =
3
Face Value =
$1,000
YTM =
3.00%
Coupon Rate =
5.00%
Coupon dates (Annual)
What is the current yield on the above bond
between today and year 1?

1.
What is the price of a bond with the following features?
Face Value = $1,000
Coupon Rate = 7% (stated as an ANNUAL rate)
Semiannual coupon payments
Maturity = 7 years
YTM = 6.34% (Stated as an APR)
State your answer to the nearest penny (e.g., 984.25)
2.
Assume you buy a bond with the following features
Bond maturity = 4
Coupon Rate = 5%
Face Value = $1,000
Annual Coupons
When you buy the bond the market interest rate...

What is the price of a bond with the following features? Face
Value = $1,000 Coupon Rate = 4% (stated as an ANNUAL rate)
Semiannual coupon payments Maturity = 5 years YTM = 4.48% (Stated
as an APR) State your answer to the nearest penny (e.g.,
984.25)

What is the price of a
bond with the following features?
Face Value = $1,000
Coupon Rate = 2% (stated as an ANNUAL rate)
Semiannual coupon payments
Maturity = 5 years
YTM = 4.8% (Stated as an APR)
State your answer to
the nearest penny (e.g., 984.25)

What is the price of a bond with the following features?
Face Value = $1,000
Coupon Rate = 5% (stated as an ANNUAL rate)
Semiannual coupon
payments
Maturity = 9 years
YTM = 4.17% (Stated as an APR)
State your answer to the nearest penny (e.g., 984.25)

What is the price of a bond with the following features? Face
Value = $1,000 Coupon Rate = 7% (stated as an ANNUAL rate)
Semiannual coupon payments Maturity = 7 years YTM = 4.43% (Stated
as an APR) State your answer to the nearest penny (e.g.,
984.25)

1.What is the price of a bond with the following features?
Face Value = $1,000
Coupon Rate = 7% (stated as an ANNUAL rate)
Semiannual coupon payments
Maturity = 7 years
YTM = 6.34% (Stated as an APR)
State your answer to the nearest penny (e.g., 984.25)
2.
You own a bond with the following features:
Face value of $1000,
Coupon rate of 4% (annual)
11 years to maturity.
The bond is callable after 7 years with...

Question 5
Bond Features
Face Value = $1,000
Coupon Rate = 5.00%
Maturity in Years = 10
Annual Coupons
The bond can be called in year 6
The market interest rate in year 6 = 3.00%
The call price is equal to $1,050
How much would the company save or lose if it calls the bond in
year 6 ?
save $22.64
save $24.34
save $25.32
save $23.61
save $25.07

1.
Assume a bond has a face value of $1,000, coupon rate of 7%,
maturity of 9 years, and can currently be purchased in the market
at a price of $1,099. The bond can be called after 5 years, and in
that case the call premium paid would be $50.
Which is bigger, YTM or YTC? Use two decimals in your
calculations for your comparison.
a.YTM
b.YTC
c.They are both the same.
d.There is not enough information to calculate YTM....

bond has $1,000 face value, 25 years to maturity, 3.6% annual
coupon rate. The bond’s current price is $948.92. Assuming the bond
pays coupons semiannually, what is the bond’s yield to maturity
(YTM)?

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