Question

Suppose that you just bought a four-year $1,000 coupon bond with a coupon rate of 6.4% when the market interest rate is 6.4%. One year later, the market interest rate falls to

4.4%. The rate of return earned on the bond during the year was x %.

*(Round your response to two decimal places.)*

Answer #1

Now, when the bond was issued, coupon rate = YTM. So issuance price = par value = $1000.

After 1 year, YTM falls to 4.4%. We need to calculate price of bond then.

where P is price of bond with periodic coupon C, M face value, periodic YTM i and n periods to maturity.

M = $1000, C = $64, n = 3, i = 4.4%

P = $176.27 + $878.82 = **$1,055.08**

Rate of Return = (Final Price - Initial Price + Coupon)/Initial Price

Rate of Return = (1055.08 - 1000 + 64)/1000 = 119.08/1000 =
**1.19%**

Suppose that you just bought a four-year $1000 coupon bond
with a coupon rate of 5.7% when the market interest rate is 5.7%.
One year later, the market interest rate falls to 3.7%. The rate
of return earned on the bond during the year was nothing( )%.
(Round your response to two decimal places.)

Suppose that you just bought a four-year $1,000 coupon bond with a
coupon rate of 5.4% when the market interest rate is 5.4%. One year
later, the market interest rate falls to 3.4%.
The rate of return earned on the bond during the year was
_%

Suppose that you just bought a four-year $1,000 coupon bond with
a coupon rate of 5.4% when the market interest rate is 5.4%. One
year later, the market interest rate falls to 3.4%.
The rate of return earned on the bond during the year was _%

Suppose that you just bought a four-year $1 000 coupon bond
with a coupon rate of 6.9% when the market interest rate is 6.9%.
One year later, the market interest rate falls to 4.9%.
The rate of return earned on the bond during the year was
the ans is 12.36%, can yo please show me the formla how
it is arrived at

Suppose that you bought a four year coupon bond with $10,000
face value, 6% coupon rate and 7% yield to maturity. After holding
it for a year and collecting the first coupon payment you decide to
sell it. Calculate the return (in %) on this investment if the
interest rate has just
dropped to 5%.
With Formula's Please

Bond Valuation
C) Suppose that Joan just bought a 15-year bond
for $902.71. The bond has a coupon rate equal to 7 percent, and
interest is paid semiannually. What is the bond’s yield to maturity
(YTM)? If Joan holds the bond for the next three years and its YTM
does not change during that period, what return will she earn each
year? What portion of the annual return represents capital gains
and what portion represents the current yield?
D) Suppose...

Question 7
You bought a 10-year, 5% coupon bond for $1,000 and sold it 1
year later for $1,050.
What is the rate of return on your investment if the bond pays
interest annually?
If your marginal tax rate is 35%, and 50% of capital gains are
taxable, what is the after-tax rate of return on your bond
investment?

Consider a bond (with par value = $1,000) paying a coupon rate
of 7% per year semiannually when the market interest rate is only
6% per half-year. The bond has 3 years until maturity.
a.
Find the bond's price today and 6 months from now after the next
coupon is paid. (Round your answers to 2 decimal places.
Omit the "$" sign in your response.)
Current price
____________
$
Price after six
months __________
$
b.
What...

Suppose you bought a bond with a coupon rate of 7.2 percent paid
annually one year ago for $945. The bond sells for $990 today.
a. Assuming a $1,000 face value, what was your total dollar
return on this investment over the past year? (Do not round
intermediate calculations and round your answer to the nearest
whole number, e.g., 32.) Total dollar return $
b. What was your total nominal rate of return on this investment
over the past year?...

Suppose you bought a bond with a coupon rate of 4.2 percent paid
annually one year ago for $900. The bond sells for $950 today.
a.
Assuming a $1,000 face value, what was your total dollar return
on this investment over the past year? (Do not round
intermediate calculations and round your answer to the nearest
whole number, e.g., 32.)
Total dollar
return
$
b.
What was your total nominal rate of return on this investment
over the past year?...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 12 minutes ago

asked 13 minutes ago

asked 25 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago