George Robinson bought 10-year, 13.4 percent coupon bonds issued by the U.S. Treasury three years ago at $912.15. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $847.63, what is his realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. - Realised Rate of Return:
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George Robinson bought 10-year, 13.4 percent coupon bonds issued by the U.S. Treasury three years ago at $912.15. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $847.63, what is his realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments.
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- George Robinson bought 10-year, 13.4 percent coupon bonds issued by the U.S. Treasury three years ago at $912.15. If he sells these bonds, for which he paid the face value of $1,000, at the current price of $847.63, what is his realized yield on the bonds? - Assume similar coupon-paying bonds make annual coupon paymentsFour years ago, Lisa Stills bought six-year, 9.50 percent coupon bonds issued by the Fairways Corp. for $947.68. If she sells these bonds at the current price of $877.07, what will be her realized yield on the bonds? Assume similar coupon-paying bonds make annual coupon payments. (Round answer to 2 decimal places, e.g. 15.25%.) Realised rate of return %One of the England’s largest corporations just expanded operations into the United States. At present, the firm has a 30 year, $10,000 par value bond outstanding, with a coupon rate of 4.3% percent paid semiannually and 15 years to maturity. The yield to maturity on this bond is 5.2 percent. What is the current value of the bond? Once you have calculated the Present Value or the current price of the bond, what would be the Current Yield on this bond? Is it selling at a discount, par, or premium?
- A $1,000 par value bond was issued 20 years ago at a 9 percent coupon rate. It currently has 5 years remaining to maturity. Interest rates on similar debt obligations are now 10 percent. Compute the current price of the bond using an assumption of semiannual payments. If Mr. Robinson initially bought the bond at par value, what is his percentage loss (or gain)? Now assume Mrs. Pinson buys the bond at its current market value and holds it to maturity, what will her percentage return be? Although the same dollar amounts are involved in parts b and c,explain why the percentage gain is larger than the percentage loss.Bob uses 19481 to purchase a 10-year par-value bond (i.e. redeems at face-value). Coupons are paid out annually (end of the year) and each coupon is equal to 2% of the face-value of the bond. If each coupon payment is invested into an account that earns an effective annual interest rate of 2.4%, then what is the face-value of the bond if Bob realizes an overall yield of 3.36% per year effective over the 10 year period? Give your answer rounded to the nearest whole number (i.e. X).An investor is interested in purchasing a 30-year U.S. government bond carrying an 8 percent coupon rate. The bond's current market price is $925 for a $1000 par value instrument. Suppose the inyestor sells the bond at the end of 13 years for $970. What is the holding-period yield? Show your work below.
- James Smith bought 10-year bonds issued by Harvest Foods five years ago for $930.00. The bonds make semiannual coupon payments at a rate of 8.0 percent. If the current price of the bonds is $1,040.77, what is the yield that James would earn by selling the bonds today?A Japanese company has a bond that sells for 107.218 percent of its ¥100,000 par value. The bond has a coupon rate of 6.8 percent paid annually and matures in 20 years. What is the yield to maturity of this bond? Ashburn Company issued 13-year bonds two years ago at a coupon rate of 9.8 percent. The bonds make semiannual payments. If these bonds currently sell for 101 percent of par value, what is the YTM? Bond P is a premium bond with a coupon rate of 9 percent. Bond D is a discount bond with a coupon rate of 5 percent. Both bonds make annual payments, a YTM of 7 percent, a par value of $1,000, and have five years to maturity. What is the current yield for Bond P? For Bond D? If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D? Suppose the following bond quote for IOU Corporation appears in the financial page of today’s newspaper. Assume the bond has a face value of $1,000, and the current date is April 19,…10 years ago, Jorge Cabrera paid $980 for a 15-year bond with the face value of $1000. The bond pays a coupon of 10 percent semiannually. Today, the bond is priced at $1,054.36. If he sold the bond today, what would be his realised yield? (Round to the nearest percent.)
- Seven years ago, a semi-annual coupon bond with a 10% coupon rate, $1,000 face value and 15 years to maturity was issued by Corn Inc. Teddy bought this bond two years ago when the market interest rate was 12%. And now the market interest rate is 5%. If teddy sells the bond now, what is Teddy’s capital gain/loss yield on the bond investment? Find the initial purchase price and selling price, then determine the yield.If the current price of a 10-year 4.5% coupon bond which pays semiannually is $96.10, what is its yield to maturity? If you purchased this bond, held it for three years and the yield to maturity fell to 4.75%, what would its new price be? If you then sold the bond what effective rate of return would you have earned on this three-year investment? Assume there are no taxes to considerA $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 8 percent. What is the current price of the bond? (Look up the answer in Table 16–2.) Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. What is her dollar profit based on the bond’s current price? Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to cover the interest costs on the loan. How much of the purchase price of $1,050 did Ms. Bright pay in cash? What is Ms. Bright’s percentage return on her cash investment? Divide the answer to part b by the answer to part c. Explain why her return is so high?
