Question

You bought a bond one year ago for $1,070.85. This bond pays a semi-annual coupon at the rate of 8.4% and matures 19 years from today. What is the percentage change in price from last year until today if interest rate have fallen and a fair yield for this bond is now 7.2%?

(a) + 10.34% (b) + 4.89% (c) - 17.16% (d) + 4.66% (e) - 4.66%

15. What is the yield-to-maturity (YTM) of a Caesar’s corporate
bond that is selling for $1,066.23 today, is paying an annual
coupon of 15% (the next coupon payment is one year from today), and
matures in 20 years?

(a) 17.0% (b) 16.0% (c) 15.0% (d) 14.0% (e) 13.0%

16. MGM Resorts Incorporated is expected to grow at an
exceptionally high rate over the next 2 years due to the success of
Macau casino. Growth in dividends is expected to be 20% for the
next 2 years before reverted back to a constant rate of 4% that is
expected to continue indefinitely. If MGM Resorts’ paid a $1.20
dividend yesterday (D0=$1.20) and the stock is valued according to
a required rate of return of 14%, what is the value of a share of
MGM Resorts stock today?

(a) $14.72 (b) $16.42 (c) $17.97 (d) $20.56 (e) $19.88

17. Your stockbroker tells you the beta on Apple Corp is 1.50, a
U.S. Treasury pays 3%, the S&P500 is expected to return 9.0%
over the next year, and an Apple bond has a YTM of
8.0%. You know that Apple is planning to pay a $10.60
dividend per share over the next year (D1 = $10.60). Based on this
information, and an expected constant growth rate of 10%, for what
do you think a share of Apple should sell?

(a) $ 151.43 (b) $ 176.67 (c) $1,060.00 (d) $ 530.00 (e) $ 353.33

Answer #1

Arthur bought a semiannual coupon bond 12 years ago. The bond
has a coupon rate of 9% and matures in 8 years. The next interest
payment is scheduled for six months from today. If the yield on
similar risk investments is 11.5%, what is the expected price of
the bond two years from today?

One year ago, you bought a bond at a price of $992.6000.The bond
pays coupons semi-annually, has a coupon rate of 6% per year, a
face value of $1,000 and would mature in 5 years. Today, the bond
just paid its coupon and the yield to maturity is 8%. What is your
holding period return in the past year? (suppose you did not
reinvest coupons)

Bond A pays annual coupons pays ins next coupon in one year,
matures in 23 years and has a face value of one thousand. Bond B
pays semi annual coupons pays its next coupon in six months,
matures in three years and has a face value of one thousand. The
two bonds have the same yield to maturity. Bond A has a coupon rate
of 7.70 percent and is priced at $736.19. Bond B has a coupon rate
of 6.40...

On the issue date, you bought a 30-year maturity, 8% semi-annual
coupon bond. The bond then sold at YTM of 7%. Now, five years
later, the similar bond sells at YTM of 6%. If you hold the bond
now, what is your realized rate of return for the 5-year holding
period? (do not solve using excel)

HW9 #6)
Bond A pays annual coupons, pays its next coupon in 1 year,
matures in 12 years, and has a face value of 1,000 dollars. Bond B
pays semi-annual coupons, pays its next coupon in 6 months, matures
in 13 years, and has a face value of 1,000 dollars. The two bonds
have the same yield-to-maturity. Bond A has a coupon rate of 8.46
percent and is priced at 836.24 dollars. Bond B has a coupon rate
of 7.72...

Bond A pays annual coupons, pays its next coupon in 1 year,
matures in 17 years, and has a face value of 1,000 dollars. Bond B
pays semi-annual coupons, pays its next coupon in 6 months, matures
in 15 years, and has a face value of 1,000 dollars. The two bonds
have the same yield-to-maturity. Bond A has a coupon rate of 9.28
percent and is priced at 998.32 dollars. Bond B has a coupon rate
of 9.62 percent. What...

A bond has a coupon rate of 4.6% and pays coupons semi-annually.
The bond matures in 5 years and the yield to maturity on similar
bonds is 2%. Is this a par, premium or discount bond? What is the
price of the bond?
What is the coupon rate for the bond? Assume semi-annual
payments. Answer as a percent!
Bond
Coupon Rate
Yield
Price Quote
t
Apple B
?
3.7%
99.09
21

A Ford Motor Co. coupon bond has a coupon rate of 6.75%, and
pays annual coupons. The next coupon is due tomorrow and the bond
matures 26 years from tomorrow. The yield on the bond issue is 6.35
%. At what price should this bond trade today, assuming a face
value of $1000 ? The price of the bond today should be
$____________. (Round to the nearest cent.)

You are reviewing a $1,000 par value bond that pays 6.8%
semi-annual coupon interest, and has 10 years before it
matures.
1a. You (and other investors) currently require a nominal annual
rate of 7.5 percent for this bond. In other words, the comparable
bonds have a YTM of 7.5%. How much should you be willing to pay for
this bond today?\
1b. If you buy this bond today and hold it for 5 years. You are
planning to sell it...

Two years ago an investor purchased a 4% semi-annual compounding
coupon bond with a remaining maturity of 20 years at a price of (at
that time) 90% of par. Today, i.e. two years after the purchase,
the investor realizes that the bond has exactly the same price like
it had two years ago (i.e. 90%). Based on this information, which
of the following answers is correct:
a) The YTM of the 4% Bond today is the higher than two years...

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