Question

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 price assuming the following spot rate curve. 6-month spot rate: 3.2%. 12-month: 5%. 18-month: 5.5%. 24-month: 5.8%.

Answer #1

Price of bond = present value of bond's cash flows.

Bond's cash flows = semiannual coupon payments + face value received at maturity

semiannual coupon payment = face value * coupon rate / 2 = $1,000 * 4% / 2 = $20

Present value = future value / (1 + discount
rate)^{n}

where n = number of years after which cash flow is received.

Price of bond = ($20 / (1 + 3.2%)^{0.5}) + ($20 / (1 +
5%)^{1}) + ($20 / (1 + 5.5%)^{1.5}) + ($20 / (1 +
5.8%)^{2}) + ($1,000 / (1 +
5.8%)^{2})

Price of bond = $968.42

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 price assuming the following
spot rate curve. 6-month spot rate: 3.2%. 12-month: 5%. 18-month:
5.5%. 24-month: 5.8%.

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).

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.

A corporate bond has
17 years to maturity, a face value of $1,000, a coupon rate of 5.3%
and pays interest semiannually. The annual market interest rate for
similar bonds is 3.2% and is quoted as a semi-annually compounded
simple interest rate, i.e 1.6% per 6-month period.
What is the price of
the bond?

Q2: A corporate bond has 22 years to maturity, a face value of
$1,000, a coupon rate of 5.2% and pays interest semiannually. The
annual market interest rate for similar bonds is 3.3% and is quoted
as a semi-annually compounded simple interest rate, i.e 1.65% per
6-month period.
What is the price of the bond?

(a) Consider a 14-year, 9.5%
corporate bond with face value $10,000. Assume that the bond pays
semi-annual coupons. Compute the fair value of the bond today if
the nominal yield-to-maturity is 11% compounded semi-annually.
(b) Consider a 11-year,
corporate bond with face value $1,000 that pays semi-annual coupon.
With the nominal yield-to-maturity equal to 10%, the bond is
selling at $802.5550. Find the coupon rate for this bond. Assume
that the market is in equilibrium so that the fair value...

A)
As with most bonds, consider a bond with a face value of $1,000.
The bond's maturity is 22 years, the coupon rate is 12% paid
annually, and the discount rate is 12%.
What is this bond's coupon payment?
B)
A bond offers a coupon rate of 14%, paid semiannually, and has a
maturity of 6 years. Face value is $1,000. If the current market
yield is 5%, what should be the price of this bond?

A corporate bond pays interest annually and has 3 years to
maturity, a face value of $1,000 and a coupon rate of 3.6%. The
bond's current price is $1,002.8. It is callable at a call price of
$1,050 in one year.What is the bond's yield to maturity? What is
the bond's yield to call?

A corporate bond pays interest twice a year and has 16 years to
maturity, a face value of $1,000 and a coupon rate of 5.8%. The
bond's current price is $1,353.74. It is callable starting 10 years
from now (years to call) at a call price of $1,124.
1.What is the bond's (annualized) yield to maturity?
2.What is the bond's (annualized) yield to call?
3. If you buy the bond today and hold it as long as possible,
which rate...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 16 minutes ago

asked 17 minutes ago

asked 20 minutes ago

asked 33 minutes ago

asked 43 minutes ago

asked 48 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago