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- What would be the value of the bond described in Part d if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond? What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond? What would happen to the value of the 10-year bond over time if the required rate of return remained at 13%? If it remained at 7%? (Hint: With a financial calculator, enter PMT, I/YR, FV, and N, and then change N to see what happens to the PV as the bond approaches maturity.)Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for 1,135.90, producing a nominal yield to maturity of 8%. However, the bond can be called after 5 years for a price of 1,050. (1) What is the bonds nominal yield to call (YTC)? (2) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?New Hampshire Corp. has decided to issue three-year bonds denominated in 10 million Chinese yuan at par. The bonds have a coupon rate of 14 percent. If the yuan is expected to appreciate from its current level of $0.15 to $0.156, $0.164, and $0.173 in years 1, 2, and 3, respectively, what is the financing cost of these bonds?
- the information regarding the domestic government fixed-interest bond market is tha the current price of a 2-year zero-coupon bond is £97 per £100 nominal, the 2-year forward rate at time t=2 is 4.6% and the 4-year par yield is 4.1%.Hence, calculate, the current price of a 4-year bond of £20,000 nominal paying coupons at a rate of 5% per annum and redeemed at 115%.Nikita Enterprises has bonds on the market making semi-annual payments, with 22 years to maturity, a par value of $1,000, and selling for $1,097.08. At this price, the bonds yield 8.72 percent. What must the coupon rate be on the bonds? Answer to four decimal places. e.g. 0.1234 If Treasury bills are currently paying 6.07% and the inflation rate is 2.55%, what is the approximate real rate of interest? Answer to four decimal places. e.g. 0.1234. Westco Company issued 21-year bonds 3 years ago at a coupon rate of 9.24 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.45%, what is the current price of the bond in dollars? Do not include a $ in your answer.The UK Government has issued a 25-year bond with a face value of £2,000.The semi-annually paid coupon is 5.3% per annum, and the yield to maturity(YTM) is 7%. Calculate the future value of reinvested coupons at maturity ofthe bond at 5% per annum.
