price a 7% bond that matures in 7.5 years if the (annual) market rate of return (YTM) is 6%? (Remember, the coupons are semi-annual). After pricing the bond, the price suddenly drops to 950. What's the annual YTM?
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price a 7% bond that matures in 7.5 years if the (annual) market
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- A one-year zero coupon bond costs $99.43 today. Exactly one year from today, it will pay $100. What is the annual yield-to-maturity of the bond? (1.e., what is the discount rate one needs to use to get the price of the bond given the future cash flow of $100 in one year?) 1.0057 0.0057 2.0057 -0.0057Example: You buy a 10-year maturity bond for the face value of $1,000 when the current interest rate is 9%. A year later, you sell the bond for $980. Assuming annual coupon payment, a. What is the new yield to maturity on the bond when you sell the bond? b. What's your holding period return during the year?Consider a bond paying a coupon rate of 10% per year semi-annually when the market interest rate is only 4% per half-year. The bond has three years until maturity. This initial payment is $1000. A: What is find the bond’s price today and 6 months time after the next coupon is paid? B: What is the total rate of return on the bond?
- Example: Interest Rate Change Suppose we buy a 5-year bond and an annual coupon rate of 4%. The bond's face value is $1,000. If interest rate changes from 7% to 6%, the bond's price will...? What is the RoR of the bond?(b)You purchase the $110 bond today and sell it off next year at $108. What is its one-year rate of return (assume the bond’s coupon rate is 5% and its face value is $100)? If the expected inflation over the course of the year is 2%, what would the ex-ante real rate of return be for the bond on part (b)?bond value, interest rate changes, and return you are interested in buying a bond with 6% coupon rate (paid annually) a maturity in six years, and a yield to maturity of 7%. assume that par value is $1000.00. a. what is the bond's market price? b. suppose you buy the bond today, hold it a year, just long enough to collect one $60 interest payment, and then sell it. When you sell it the yield to maturity is still 7%. what price do you receive when you sell it? c. Counting both the change in price and the coupon payment that you received, what percentage return did you earn over the year? d. assume instead that when you are ready to sell the bonds yield to maturity has dropped to 6%. what price do you receive and what return do you earn for the year? can you please show the work step by step
- You hold an annual coupon bond for 1 year, receiving the 0.14 coupon before selling. When bought it had 11 years to maturity, and the YTM was 0.08. Over the year, interest rates ROSE by 0.009 What is the total holding period return for this investment? 0.0276 0.0300 0.0291 0.0283 0.0267 [don't give chat gpt answer]Calculate the duration of a 6%, $1000 par value bond maturing in 4 years if the yield to maturity is 9% and interest is paid semiannually. If the yield of the bond in part (a) decreases by 50 basis point, what is the new price based on the duration? What is the actual price? Why does the actual price differ from the duration-estimated price? 3 Assume you purchase a 8-year $1000 par value bond, with a coupon of 10% compounding annually and yield of 9%. Immediately after you purchase the bond, the yield fell to 7% and remain at that level to maturity. Calculate the realized horizon yield, if you hold the bond for 5 years and then sell.What should be the current price of a 3-year maturity bond with a 12% coupon rate paid annually? And if you purchase the coupon bond at the price you calculated in the above, what would your total expected rate of return over the next year be (coupon plus price change)? Ignore taxes.
- Consider a two-year bond with a face value $1000 and a coupon rate 4.2%paid annually.(a) On the market, the 2-year interest rate is 3%. What is the fair marketprice for this bond?(b) When the interest rate increases to 5%, what would the bond pricebecome?(c) What if the interest rate falls to 1%?1. You buy a 6 year bond with an annual 5% coupon at par value, $1000. If the yield to maturity at the end of the first year changes to 3% what is the end of the year value of the bond(after the coupon payment, remember: bond value does not include this coupon)? 2. Calculate the value of a 6 year 2% coupon bond with semiannual payments, 1000 par. Expected return is the risk free rate of 3%. 3. Price a 5 year 4% semiannual coupon bond if the yield to maturity is 6% (write the price as if par is 100, use 5 decimal places)You will be paying $8,600 a year In tultion expenses at the end of the next two years. Bonds currently yleld 7%. Q. What is the present value and duration of your obligation? b. What maturity zero-coupon bond would Immunize your obligation? c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately Increase to 9%. What happens to your net position, that is, to the difference between the value of the bond and that of your tultion obligation? d. What if rates fall Immediately to 5% ? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) \table[[,,,],[Present value,,,,,],[Duration,,years,,,]]