Question

1. Analyze the 20-year, 8% coupon rate (Semi-annual payment), $1,000 par value bond. The bond currently sells for $1,218. What's the bond's yield to maturity?

A. 5.06%

B. 5.68%

C. 5.38%

D. 6.10%

2. Analyze the 20-year, 8% coupon rate (Semi-annual payment), $1,000 par value bond. The bond currently sells for $1,218. What's the bond's current yield, and capital gain yield? (Please show your work)

A. 6.57%, -0.47%

B. 6.07%, -0.69%

C. 6.57%, -0.47%

D. 6.07%, 0.69%

Answer #1

Ans 1) price of bond = C * (1 - (1+r/2)^(2*n))/(r/2) + FV/(1 + r/2)^(2*n)

where C is coupon payment which is equal to $40 ( 8/2 % of 1000)

FV is face value of bond = $1000

n is number of year till maturity which is = 20 years

Price of bond = $1218

while putting all the above value we will get the bond's yield
to maturity equal to **6.1%.**

Ans 2) Bond's current yield = yearly coupon payment / bond price.

= 80/1218 = 6.57%

Since the current bond price is more than redemption value, capital gain yield will be negative (-.47%).

Find the yield to maturity for a 15-year, 8% annual coupon rate,
$1,000 par value bond if the bond sells for $1,218 currently? We
assume that interest is paid on this bond annually.
2.90%
5.79%
6.64%
6.86%
Using the information from above, calculate the bond’s current
yield.
6.20%
6.57%
6.80%
7.18%
Using the information from Question 43 and 44, calculate the
bond’s capital gain yield.
-0.78%
0.78%
6.22%
6.57%

43.Find the yield to maturity for a 15-year, 8% annual coupon
rate, $1,000 par value bond if the bond sells for $1,218 currently?
We assume that interest is paid on this bond annually.
2.90%
5.79%
6.64%
6.86%
Using the information from Question 43, calculate the bond’s
current yield.
6.20%
6.57%
6.80%
7.18%
Using the information from Question 43 and 44, calculate the
bond’s capital gain yield.
-0.78%
0.78%
6.22%
6.57%

•A 20-year, $1,000 par value bond has an 6.5% annual payment
coupon. The bond currently sells for $1025. If the yield to
maturity remains at its current rate, what will the price be 8
years from now?

A 20-year, $1,000 par value bond has a 9% semi-annual coupon.
The bond currently sells for $925. If the yield to maturity remains
at its current rate, what will the price be 8 years from now?
a.
$937.7
b.
$956.95
c.
$939.85
d.
$503.21

A 20-year, 8% annual coupon bond
with a par value of $1,000 may be called in 5 years at a call price
of $1,040. The bond sells for $1,100. (Assume that the bond has
just been issued.)
Basic Input Data:
Years to maturity:
20
Periods
per year:
1
Periods
to maturity:
20
Coupon
rate:
8%
Par
value:
$1,000
Periodic
payment:
$80
Current
price
$1,100
Call
price:
$1,040
Years
till callable:
5
Periods
till callable:
5
a. What is the bond's...

A 20-year, $1,000 par value bond has a 9% semi-annual coupon.
The bond currently sells for $925. If the yield to maturity remains
at its current rate, what will the price be 10 years from now? a.
$935.01 b. $930.01 c. $952.84 d. $945.72

A 15-year bond is currently priced at $900 and pays a
semi-annual coupon payment of 8%. The par value is $1,000. What is
the yield to maturity?

A 30-year, $1,000 par value bond has an annual payment coupon of
7.5%. The bond currently sells for $910. If the yield to maturity
remains at its current rate what will the price be 10 years from
now?

A 30-year, $1,000 par value bond has a 7.5% annual payment
coupon. The bond currently sells for $910. If the yield to maturity
remains at its current rate, what will the price be 10 years from
now?
$884.19
$921.01
$930.96
$947.25
$978.50

A $1,000 par 20-year bond, with a coupon rate of 4.25% (payable
in semi-annual installments) was issued on April 15, 2010. The bond
is currently priced at $1,126.75. What is its yield-to-maturity if
you buy it today? Round your answer to the nearest basis point.

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