Assume you purchase (at par) one 19-year bond with a6.55 percent coupon and a $1,000 face value. Supposeyou are only able to reinvest the coupons at a rate of 4.55percent. If you sell the bond after 14 years when the yieldto maturity is 7.55 percent, what is your realized yield?Note: Do not round intermediate calculations. Roundyour answers to 2 decimal places.Face ValueSelling priceRealized yield✓ Answer is not complete.$ 959.595.81%

Realized yield refers to the return which is earned by the investors over the investment amount…

Assume you purchase (at par) one 19-year bond with a 6.55 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4 percent. If you sell the bond after 14 years when the yie to maturity is 7.55 percent, what is your realized yield? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Answer is not completo

Assume you purchase (at par) one 19-year bond with a 6.55 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4 percent. If you sell the bond after 14 years when the yie to maturity is 7.55 percent, what is your realized yield? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Answer is not completo

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

See similar textbooks

Similar questions

Assume you purchase (at par) one 12-year bond with a 6.10 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.10 percent. If you sell the bond after 7 years when the yield to maturity is 7.10 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. FV Selling price Realized yield $ 483.26 X $ 959.11 5.37 %
c. What will be the yield to maturity on two-year zeros? (Do not round intermediate calculations. Round your answers to 2 decimal places.) YTM % d. If you purchase a two-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint. Compute the current and expected future prices.) Ignore taxes. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected total rate of return % e. If you purchase a three-year zero-coupon bond now, what is the expected total rate of return over the next year? (Hint. Compute the current and expected future prices.) Ignore taxes. (Do not round intermediate calculations. Round your answer to 2 decimal
Assume you purchase (at par) one 11-year bond with a 6.95 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 percent. If you sell the bond after 6 years when the yield to maturity is 7.95 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) FV $ 1,018.53 Selling price 960.02 Realized yield $ 5.30 %
Suppose that you buy a 1-year maturity bond with a coupon of 7% paid annually. If you buy the bond at its face value, what real rate of return will you earn if the inflation rate is 4%? 6%? 8%? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)
Assume you purchase (at par) one 17-year bond with a 6.35 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.35 percent. If you sell the bond after 12 years when the yield to maturity is 7.35 percent, what is your realized yield? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. FV Selling price Realized yield $ $ 973.52 959.38 5.65 %
Assume you purchase (at par) one 14-year bond with a 6.20 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.20 percent. If you sell the bond after 9 years when the yield to maturity is 7.20 percent, what is your realized yield? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
note:- give me answer( d) explan answer Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it. a. If the bond's yield to maturity is 6% when you sell it, what is the internal rate of return of your investment? b. If the bond's yield to maturity is 7% when you sell it, what is the internal rate of return of your investment? c. If the bond's yield to maturity is 5% when you sell it, what is the internal rate of return of your investment? d. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. Note: Assume annual compounding.
A firm's bonds have a maturity of 10 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 5 years at $1,054.36, and currently sell at a price of $1,104.71. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places. YTM: % YTC: % What return should investors expect to earn on these bonds? Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.
Suppose you are given the following information about the default-free, coupon-paying yield curve: Maturity (years) Coupon rate (annual payment) YTM 1 0.00% 2.587% a. Use arbitrage to determine the yield to maturity of a two-year zero-coupon bond. b. What is the zero-coupon yield curve for years 1 through 4? Note: Assume annual compounding. 2 11.00% 4.008% a. Use arbitrage to determine the yield to maturity of a two-year zero-coupon bond. The yield to maturity of a two-year, zero-coupon bond is %. (Round to two decimal places.) b. What is the zero-coupon yield curve for years 1 through 4? The yield to maturity for the three-year and four-year zero-coupon bond is found in the same manner as the two-year zero-coupon bond. The yield to maturity on the three-year, zero-coupon bond is %. (Round to two decimal places.) The yield to maturity on the four-year, zero-coupon bond is %. (Round to two decimal places.) Which graph best depicts the yield curve of the zero-coupon bonds? (Select the…
Compute the price of a 5.9 percent coupon bond with 15 years left to maturity and a market interest rate of 9.6 perceL (Assume interest payments are semiannual.) (Do not round Intermedlote calculations. Round your finol answer to 2 declmal places.) Bond price Is this a discount or premium bond? O premium bond O discount bond ला here to search | 近 0 F3 F4 F5 F7 F8 F10 F11
1. Suppose you purchase bond that has a coupon of $75, face value of S1,000, and current price of $1,100. What is your coupon rate? What is your current Save Answer yield? 2. Suppose you purchase a bond with a coupon of $50 for $1,010. You sell it one year later for $900. What rate of return did you carn?
Consider the following $1,000 par value zero-coupon bonds: Bond B C D Bond Required: According to the expectations hypothesis, what is the market's expectation of the yield curve one year from now? Specifically, what are the expected values of next year's yields on bonds with maturities of (a) one year? (b) two years? (c) three years? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. BUD Years to Maturity 1 2 3 4 C YTM (%) 6.6% 7.6 8.1 8.6 Years to Maturity 1 2 3 YTM (%) 8.61 % 9.11 % 10.12%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS