Bond P is a premium bond with a coupon rate of 8.4 percent. Bond D is a discount bond with a coupon rate of 4.4 percent. Both bonds make annual payments, a YTM of 6.4 percent, a par value of $1,000, and have nine years to maturity. a. What is the current yield for Bond P? For Bond D? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Bond P Bond D a. Current yield b. Capital gains yield % % % %

Bond P is a premium bond with a coupon rate of 8.4 percent. Bond D is a discount bond with a coupon rate of 4.4 percent. Both bonds make annual payments, a YTM of 6.4 percent, a par value of $1,000, and have nine years to maturity. a. What is the current yield for Bond P? For Bond D? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Bond P Bond D a. Current yield b. Capital gains yield % % % %

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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Saved Bond P is a premium bond with a coupon rate of 9 percent. Bond D has a coupon rate of 5 percent and is currently selling at a discount. Both bonds make annual payments, have a par value of $1,000, a YTM of 7 percent, and 15 years to maturity. a. What is the current yield for Bond P and Bond D? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P and Bond D? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. Bond P current yield a. Bond D current yield b. Bond P capital gains yield b. Bond D capital gains yield
A bond's credit rating provides a guide to its price. Assume Aaa bonds yield 3.6% and Baa bonds yield 4.6%. Assume a 10% five-year bond with annual coupons and a face value of $1,000. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. What is the bond's price if it is rated as Aaa? b. What is the bond's price if it is rated as Baa?
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price of Bond YTM Maturity (Years) 1 978.43 2.20 % 2 924.97 % 3 840.12 % 4 $ 784.39 % b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price of Bond Maturity (years) 1 $ 978.43 2 924.97 840.12 784.39 Maturity (Years) Price of Bond Forward Rate 2 % 3 % 4 % AWN 3 4 $ $ GA $ $ $ SA 924.97 840.12 784.39
What is the market price of a bond if the face value is $1,000 and the yield to maturity is 6.7% ? The bond has a 6.15% coupon rate and matures in 12 years. The bond pays interest semiannually. Please express answer as $X.XX or XX.XX and use rounding guideline included in "Course Information" module. Do not round until the final result.
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Maturity (Years) 1 2 3 4 Maturity (years) 1 2 3 4 Maturity (Years) 2 3 4 $ $ $ $ b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) $ $ $ Price of Bond 983.40 918.47 867.62 774.16 Price of Bond $983.40 918.47 867.62 774.16 Price of Bond YTM 918.47 867.62 774.16 % % % % Forward Rate % % % #
A bond sells for $894.17 and has a coupon rate of 6.20 percent. If the bond has 13 years until maturity, what is the yield to maturity of the bond? Assume semiannual compounding. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Maturity (Years) Price of Bond YTM 1 $ 943.40 % 2 $ 898.47 % $ 847.62 % $ 792.16 % b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. Assume annual coupon payments. (Do not round intermediate calculations. Round your answers to the nearest whole percent.) Maturity (years) Price of Bond 1 $943.40 898.47 847.62 792.16 Maturity (Years) Price of Bond Forward Rate $ 898.47 % 3 $ 847.62 % 4 $ 792.16
Calculate the price of a 5.2 percent coupon bond with 18 years left to maturity and a market interest rate of 4.6 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond price Is this a discount or premium bond? premium bond O discount bond
The following table shows some data for three bonds. In each case, the bond has a coupon of zero. The face value of each bond is $1,000. Bond Price Maturity (Years) Yield to Maturity A $ 230 20 B с 230 17 10% 9 What is the yield to maturity of bond A? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places. Assume annual compounding. What is the maturity of B? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Assume annual compounding. What is the price of C? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Assume annual compounding.
Calculate the price of a 5.6 percent coupon bond with 10 years left to maturity and a market interest rate of 8.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond Price : $____.__ Is this a discount or premium bond? discount bond premium bond
Find the duration of a bond with a settlement date of May 27, 2025, and maturity date November 15, 2036. The coupon rate of the bond is 8.0%, and the bond pays coupons semiannually. The bond is selling at a bond- equivalent yield to maturity of 8.0%. Use Spreadsheet 16.3 Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Macaulay duration Modified duration
a. What is the duration of a two-year bond that pays an annual coupon of 11.5 percent and has a current yield to maturity of 13.5 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 4 decimal places. (e.g., 32.1616))b. What is the duration of a two-year zero-coupon bond that is yielding 11.5 percent? Use $1,000 as the face value.

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