Which of the bonds has the most reinvestment risk? Explain your answer. a. 7-year bonds with a 5% couponb. 1-year bonds with a 12% couponc. 3-year bonds with a 5% coupond. 15-year zero coupon bondse. 15-year bonds with a 10% coupon

The prices of zero-coupon bonds with various maturities are given: maturity in years price 1 975.66 2 885.89 3 821.92 4 759.20 5 670.20 A) How could you construct a 1-year forward loan beginning in year 3? face value = ? rate of synthetic loan = ? B) How could you construct a 1-year forward loan beginning in year 4? face value = ? rate of synthetic loan = ?

Question 2A. A bond has a face value of $2000, a coupon rate of 6% and matures in 10years’ time. If its current yield to maturity is 8% what is the current price ofthe bond? If the yield falls to 4% determine the bond price. What do theseresults indicate about the relationship between the price of a bond and itsyield to maturity? B. You are asked to put a value on a bond which promises eight annual couponpayments of £70 and will repay its face value of £1000 at the end of eightyears. You observe that other similar bonds have yields to maturity of 9 percent. How much is this bond worth? You are offered the bond for a priceof £1030.44. What yield to maturity does this represent? C. Explain in detail the trade-off model of capital structure. In light of the currentglobal financial challenge, discuss which elements of the model areexpected to become most prevalent?

1. Bond prices and yields (S3.1) A 10-year bond is issued with a face value of $1,000, paying interest of $60 a year. If interest rates increase shortly after the bond is issued, what happens to the bond's a. Coupon rate? b. Price? c. Yield to maturity?

Which of the following bonds will have the larger price change (dollar value) for a 75- basis point change in yield? A. A $120 dollar bond with duration 2.25 B. A $70 dollar bond with duration 3.25 C. A $160 dollar bond with duration 1.75 D. A $200 dollar bond with duration 1.25 E. A $300 dollar bond with duration 0.75

A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Suppose the bond issued by Logan Inc. has 5-year maturity with coupon of 12%. 4.1. If the yield to maturity is 10%, compute the bond value. Compute the modified duration of this bond. Use the modified duration to estimate the change in price if the interest rate decreases by 0.50%. 4.2. 4.3.