QUESTION 4 Based on your risk assessment, your required rate of return is 9 percent for a callable bond you own. This is a new bond with 20 years to maturity. It is a $1,000 par value bond paying 10 percent interest annually. The market price of the bond is $950. The bond may be called any time after 3 years and the call premium is $200. Find the yield-to-call. O A. 9.52% OB. 10.22% O C. 11.75% OD. 12.86% E. 13.64%

QUESTION 4 Based on your risk assessment, your required rate of return is 9 percent for a callable bond you own. This is a new bond with 20 years to maturity. It is a $1,000 par value bond paying 10 percent interest annually. The market price of the bond is $950. The bond may be called any time after 3 years and the call premium is $200. Find the yield-to-call. O A. 9.52% OB. 10.22% O C. 11.75% OD. 12.86% E. 13.64%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question 1 Graystone bonds have a maturity value of RM100. The bonds carry a coupon rate of 10 percent. Interest is paid semi-annually. The bonds will mature in nine years. If the current market price is RM96.50, a.what is the yield to maturity on the bond? b.what is the current yield on the bond? Give typing answer with explanation and conclusion
QUESTION 3 The market price of a bond is $1,119.90; it has 4 years to maturity, a $1,000 par value, and pays a coupon of $100 every year. What is the yield to maturity? (assume the coupons are paid annually). A. 3.27% B. 6.50% C. 6.54% D. 10.00% E. None of the above
Question 5 a) A 4 year bond that pays 7.5% semi- annual coupon was issued when the yield was 8%. If the yield goes down 55 basis point, what would be the predicted price of the bond? b) Consider a 15 year 6.5% semi-annual coupon bond whose duration is approx. 9.50 years when required rate of return (yield to maturity) is 7.58%. Prove that this bond is immunized if you hold it for 9.50 years. Note: Please show workings normally. Do not show workings in Ms Excel.
QUESTION 1 What is the coupon rate for the bond? Assume semi-annual payments. Answer as a percent! Bond Coupon Rate Yield Price 2.7% $990.90 Apple B ? t 16 QUESTION 2 A bond has a coupon rate of 6,3% and pays coupons annually. The bond matures in 2 years and the yield to maturity on similar bonds is 3.7%. What is the price of the bond?
Question 7 You hold an annual coupon bond for 1 year, receiving the 0.14 coupon before selling. When bought it had 6 years to maturity, and the YTM was 0.095. Over the year, interest rates ROSE by 0.002What is the total holding period return for this investment? Group of answer choices 0.0939 0.0856 0.0903 0.0879 0.0820
QUESTION 3 A three year bond with a current price of 922.69 has a YTM of 8%, coupon rate of 5%, and a duration (Macaulay) of 2.853. If interest rates increase by 78 basis points, what is the predicted price of the bond after the rate change (use duration approximation). Round your final answer to two decimal places.
QUESTION 1 Coupon Payment is calculated: O a. Adding Coupon Rate with Face value O b. It is the Coupon Rate only O c. Dividing Coupon Rate upon Face value O d. Multiplying Coupon Rate with Face value
Question 6 Assume that a bond makes 10 equal annual payments of \$1,000$1,000 starting one year from today. The bond will make an additional payment of \$100,000$100,000 at the end of the last year, year 10. (This security is sometimes referred to as a coupon bond.) If the discount rate is 3.5\%3.5% per annum, what is the current price of the bond?
Question 3 A$100 000 bond has 3 years to maturity, and 8% p.a. coupon rate (paid annually). The current yield rate is 10%. Required: a) What is the duration of this bond? b) What is the price of this bond? c) If the current yield is decreased by 100 basis points, 1) What is the percentage change in bond price using the duration approach? 2) What is the price of this bond with this new yield rate?
D4 Finance I buy a 12-year coupon bond that pays 5% coupon annually. The yield to maturity is 6% per year and Face Value of $100. There is another bond trading in the market. It is a 7-year bond paying a 6% annual coupon with a yield to maturity of 5% and Face Value of $100. Hedge your 12-year position using this bond. How many units of the second bond should you buy/sell? a. sell 1.3215 b. buy 1.2293 c. buy 1.3215 d. sell 1.2293
Question 4 (a) Consider a 3-year forward contract to buy a coupon-bearing bond thatwill mature 3-years from today. The current price of the bond is $120. Suppose that on that bond 3 coupon payments of $10 are expected after 12, 24, and 36 months. We assume that the 12M, 24M, and 36M risk-free interest rates (continuously compounded) are 1.75%, $2.1, and 2.5% per annum, respectively. Determine the strike price, the forward price and the value of the forward contract.(b) 18 months later, the price of the bond is $105 and the risk-free interest rates for maturity 6M and 18M (continuously compounded) are 1.1% and 1.9% per annum, respectively. What are the strike price, the forward price and the value of the forward contract?
QUESTION 12 Consider a 4-year 5% coupon bond selling for $102. The yield to maturity is 4%, and the par value for this bond is $100. Calculate the actual price of the bond for a 50 basis-point increase in interest rates. O A. $103.726 O B. $101.812 O C. $104.762 D. $99.23 QUESTION 13 Based on Question 12 above, estimate the price of the bond for a 100 basis-point increase in interest rates. O A. $101.812 O B. 3. $99.24 O C. $100.00 D. $104.342

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