Quiz1-4

* Assignment 3 i Assume coupons are paid annually. Here are the prices of three bonds with 10-year maturities. Assume face value is $100. Bond Coupon (%) 248 a. What is the yield to maturity of each bond? b. What is the duration of each bond? Price (%) 80.36 96.95 135.22 Complete this question by entering your answers in the tabs below. Required A Bond Coupon (%) 2 4 8 Required B What is the yield to maturity of each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. YTM % % % Saved 22255 35445

Question 3 (Bond and Equity Valuation) Bond A is a $1,000, 6% quarterly coupon bond with 5 years to maturity. (a)  If you bought Bond A today at a yield (APR) of 8%, what is your purchase price? Is this a premium or discount bond? Why?  (b)  One year later, Bond A's YTM (APR) has gone down to 6% and you sell it immediately after receiving the coupon. (i)  What is the current yield?  (ii)  What is the capital gains yield?  (iii)  What is the one-year total rate of return (in APR) if the coupons are reinvested at 2% per quarter during the holding period?  (iv)  Can Bond A’s one-year total rate of return be determined correctly by simply adding up the current yield and the capital gains yield? Explain your answer without calculations.

QUESTION 2 Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the yield to maturity of the bond? A. 30% B. 0% C. 35.4% D. 100.2%

Question 1: Two $900 par value bonds are bought to be redeemed at the end of the same period and to yield an annual nominal rate of 5% convertible semi-annually. The price of the first bond is $1027.63 and has a coupon rate of 6%. The second bond has a coupon rate of 3%. What is the price of the second bond? A) 644.74 B) 859.65 C) 429.83 D) 967.11 E) 322.37

Problem 2 (Required, 25 marks) We consider a 5-year straight term bond issued today. The bond pays coupon quarterly and the current annual effective yield rate is i = 7.1859%. You are also given that The current bond price is 2167.529. The clean price of the bond at the end of 15th month is 2130.929. Assuming that the yield rate remains unchanged over these 5 years, find the clean price of the bond at the end of 22nd month.

Intro A corporate bond has 2 years to maturity, a coupon rate of 8%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 0.095. Part 1 What is the price of the bond (in $)? 977.44 Correct ✓ Attempt 1/10 for 10 pts. Since market interest rates (or yields or yield to maturity), are quoted as bond equivalent yields (a type of APR), we need to divide the quoted rate by 2: Period rate: 0.095 = 0.0475 2 The 6-monthly interest payment, or coupon, is: Coupon rate 0.08 Coupon = Face value= 2 21,000 = 40 Bond price: Coupon Par value Р T + r (1+r) (1+r)* 40 0.0475 1 1,000 4+ (1+0.0475) (1+0.0475) = 973.25 Part 2 What is the bond's duration? 2+ decima Submit Part 3 Attempt 2/10 for 9.5 pts. Attempt 1/10 for 10 pts. If yields fall by 0.8 percentage points, what is the new expected bond price based on its duration (in $)? 0+ decima Submit Part 4 Attempt 1/10 for 10 pts. What is the actual bond price after the change in yields (in $)? 0+ decima Submit…

Problem 3. Larga Industries has outstanding $1,000 par value bond with an 8% coupon interest rate. The bond has 12 years remaining to its maturity date. a. If the interest is paid annually, find the value of the bond when the required return is (1) 7%, (2) 8%, (3) 10%. Indicate for each case in part whether the bond is selling at a discount, at a premium, or at its par value. c. Using the 10% required return, find the bond's value when interest is paid semi-annually. b.

Suppose a five- year, $ 1 comma 000$1,000 bond with annual coupons has a price of $ 904.31$ 904.31 and a yield to maturity of 6.1 %6.1% . What is the bond's coupon rate? Question content area bottom Part 1 The bond's coupon rate is enter your response here % . (Round to three decimal places.)

Question 12: In the following, you are given 5 bonds. Suppose coupons of all bonds are paid semiannually, the bond principal 100 is paid at the bond maturity b) Calculate the duration for each bond Years to Maturity 0.5 1 1.5 2 2.5 Bond price 98 99 99 98 97 Coupon per year Spot rate Duration ? 5. 4)

QUESTION 1 "A coupon bond that pays interest annually has a par value of $1000, matures in 6 years, and has a yield to maturity of 6%. If the coupon rate is 15%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."    QUESTION 2 "A coupon bond that pays interest quarterly has a par value of $1000, matures in 4 years, and has a yield to maturity of 15%. If the coupon rate is 8%, the value of the bond today will be __________. Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."    QUESTION 3 "What is the coupon payment of a 4-year $1000 bond, 9% YTM, and with a 2% coupon rate and semiannually payments? Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."   QUESTION 4 "Consider a zero-coupon bond with $100 face value and 5…

a. b. C. Problem 9.4: R & J, Inc. issues a 10-year $1,000 bond that pays $28.50 semi-annually. The market price for the bond is $975. The market's required yield to maturity on a comparable-risk bond is 6 percent. a. What is the value of the bond to you?. b. What happens to the value if the market's yield to maturity on a comparable-risk bond (i) increases to 8 percent or (ii) decreases to 4 percent? c. Under which of the circumstances in parts a & b should you purchase the bond? Years Par (FV) PMT Nper m Comparable risk (Rate) Bond value (PV) Comparable risk (Rate) Bond value (PV) Comparable risk (Rate) Bond value (PV)

Problem 4 - Regal Health Plans issued a ten-year, 12 percent annual coupon bond. The bond now sells for $1,100. The bond has a call provision that allows Regal to call the bond in four years at a call price of $1,060. b. What is the bond's yield to call?

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