9) What is the Discount Yield (DY) and the Bond Equivalent Yield (BEY) on a $5 million commercial paper issue that currently sells at 98.625 percent of its face value and is 136 days from maturity? A. 3.32% DY; and 3.46% BEY. B. 3.84% DY; and 3.94% BEY. C. 3.86% DY; and 3.89% BEY. D. 3.64% DY; and 3.74 % BEY.

9) What is the Discount Yield (DY) and the Bond Equivalent Yield (BEY) on a $5 million commercial paper issue that currently sells at 98.625 percent of its face value and is 136 days from maturity? A. 3.32% DY; and 3.46% BEY. B. 3.84% DY; and 3.94% BEY. C. 3.86% DY; and 3.89% BEY. D. 3.64% DY; and 3.74 % BEY.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that a $10,000.00 bond paying 8.5% interest is currently selling at 106. What is the current selling price of the bond? What is the current yield of this bond? a. b. (
4. What is the yield-to-maturity of a bond that is selling at a 5% discount to par, paying 11.25% in annual interest on a semiannual basis, and maturing in 7 years? a. 11.23% b. 12.34% c. 13.10% d. 13.79%
Question 3. Refer to the following two money market instruments: Money Market) a 60 day $10,000 CD (add on) quoted at 6% interest, and; a 180 day $10,000 T-bill (discount) quoted at 5.9%. i. ii. (a) Calculate the initial price (P0) and face value (Pf) of the two instruments. (b) Calculate the bond equivalent yield of the two instruments. (c) Which instrument pays a higher bond equivalent yield? (d) In general, the market price of a T-bill is more volatile than a comparable CD in the secondary markets? Explain why this is true.
If 10-year T-bonds have a yield of 4.0%, 10-year corporate bonds yield 7.6%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.23% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond? Round 2 decimal places
1. Calculate the total annual interest, total cost, and current yield for the bonds. (Round the"Current yield" to the nearest tenth percent and other answers to the nearest whole dollar.)Bond Number of bonds purchased Selling price Total annual interest Total cost Current yieldMuni 5 22 6 81.375 $ $ %
4. What is the discount yield, bond equivalent yield, and effective annual return on a $5 million commercial paper issue that currently sells at 98.625 percent of its face value and is 136 days from maturity?
1. Consider the following four bonds (assuming semi-annual compounding and the par value of $1,000) C 10% 25 40 a) What is the price of each bond if the required yield is 10%? b) What is the price of each bond if the required yield decreases from 10% to 9%, and by what percentage did the price of each bond change? c) What is the price of each bond if the required yield increases from 10% to 11%, and by what percentage did the price of each bond change? d) From your answers to Question 1, parts b and c, what can you say about the relative price volatility of a bond when the yield decreases compared to when the yield increases? Comparing bonds A, B, and C, what can you say about the relative price volatility of a bond with longer maturity compared to one with shorter maturity? e) f) Coupon Rate Maturity (years) A 10% 10 B 10% D 12% 10 Comparing bonds A and D, what can you say about the relative price volatility of a bond with lower coupon rate compared to one with higher coupon rate?
6. Yield to Maturity Each of the bonds shown below pays interest annually. Bond Par Value Coupon Years to Maturity Current Value A 12% 15 B 10% 10 C $1000 13% 10 D $1000 8% 4 a) Calculate the yield to maturity (YTM) for each bond. $1000 $500 $850 $560 $1200 $900 b) What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond? Explain.
A bond has a $1,000 face value, a market price of $1,045, and pays semiannual payments of $42.25 each. What is the coupon rate? A. 6.76 percent B. 7.00 percent C. 7.12 percent D. 8.45 percent E. 8.64 percent
f the nominal rate of return on an Aksoy Corporation bond is 9%, the risk premium is 4%, and the inflation premium is 2%, what is the pure rate of interest? a. 0%, b. 6.08%. c. 2.75%. d. 3%.
What is the coupon rate of a ten-year, $10,000 bond with semiannual coupons and a price of $9,558.57, if it has a yield to maturity of 6.6%? OA. 7.188% OB. 5.99% OC. 4.792% OD. 8.386%
Consider the following bonds: Bond A B CD с Coupon Rate (annual payments) 0.0% 0.0% 4.3% 7.7% The percentage change in the price of bond A is |___%. (Round to one decimal place.) What is the percentage change in the price of each bond if its yield to maturity falls from 6.9% to 5.9%? The percentage change in the price of bond B is %. (Round to one decimal place.) Maturity (years) 15 The percentage change in the price of bond C is %. (Round to one decimal place.) The percentage change in the price of bond D is %. 21500

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