Question

2. Today, a bond has a coupon rate of 8.4 percent, par value of 1,000 dollars, YTM of 4.82 percent, and semi-annual coupons with the next coupon due in 6 months. One year ago, the bond’s price was 1,041.94 dollars and the bond had 17 years until maturity. What is the current yield of the bond today? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

3. One year ago, a bond had a coupon rate of 4.86 percent, par value of $1000, YTM of 9.02 percent, and semi-annual coupons. Today, the bond’s price is 951.01 and the bond has 7 years until maturity. What was the current yield of the bond one year ago? The next coupon is due in 6 months. Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

4. Six months ago, a bond had a coupon rate of 10.14 percent, par value of $1000, YTM of 4.78 percent, and semi-annual coupons. Today, the bond’s price is 994.04 and the bond has 9 years until maturity. What was the current yield of the bond six months ago? The next coupon is due in 6 months. Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

5. Bond A has a coupon rate of 4.43 percent, a yield-to-maturity of 15.76 percent, and a face value of 1,000 dollars; matures in 12 years; and pays coupons annually with the next coupon expected in 1 year. What is (X + Y + Z) if X is the present value of any coupon payments expected to be made in 6 years from today, Y is the present value of any coupon payments expected to be made in 8 years from today, and Z is the present value of any coupon payments expected to be made in 15 years from today?

6. Reg owns investment A and 1 bond B. The total value of his holdings is $2,820. Bond B has a coupon rate of 8.80 percent, par value of $1000, YTM of 9.42 percent, 14 years until maturity, and semi-annual coupons with the next coupon due in 6 months. Investment A is expected to pay annual cash flows to Reg of $312 per year forever with the first annual cash flow expected in 1 year from today. What is the expected return for investment A? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer 1

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