The price of which of the following securities is likely to be less sensitive to a 1% increase in market yield? A A 10-year zero coupon bond B A 10-year 10% coupon bond C A Disney unsecured bond D A long maturity treasury bill
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- A
A 10-year zero coupon bond
- B
A 10-year 10% coupon bond
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CA Disney unsecured bondDA long maturity treasury bill
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- which of the following bond would have the highest price sensitivity to changes in interest rates? 1. 15 year zero coupon bond 2. 30 year 5% coupon bond 3. 30 year 10% coupon bond 4. 15 year 5% coupon bond 5. 30 year zero coupon bondWhich of the following Treasury securities is likely to show the longest duration? A A 10-year zero coupon bond B A 10-year 10% coupon bond C A Disney unsecured bond D A very long maturity treasury bill A lower coupon rate has what effect on the bond’s duration? A Duration is twice as long for each percent increase B Duration is lower C Duration stays the same D Duration is higherWhy the number of bonds does not affect the realized return? Explain your answer thoroughly. Issuer Face Value Coupon Rate Interest per Year Rating Quoted Price Years until Maturity Sinking Fund Call Period Nominal YTM FV of Coupon FV of Coupon + Face Value Required Return ABC Energy $1,000 5% $50 AAA $703.10 20 Yes 3 8.0001% 1,685.06 $2,685.06 6.8133% ABC Energy $1,000 0% 0 AAA $208.30 20 Yes NA 7.9997% 0.00 $1,000.00 7.9997% TransPower $1,000 10% $100 AA $1,092 20 Yes 5 9.0001% 3,370.13 $4,370.13 7.0555% Telco Utilities $1,000 11% $110 AA $1,206.40 30 No 5 8.9998% 7,479.54 $8,479.54 6.6082%
- Consider the following zero coupon bonds:Bond Yrs to Mat. Yield to Maturitya 1 0.0433b 2 0.046c 3 0.0495d 4 0.0511e 5 0.0531f 6 0.0555What is the forward rate for year5 Group of answer choices 0.0630 0.0593 0.0648 0.0611 0.0668 Please answer fast i give you upvote.The duration of a15 year, zero-coupon bond _____? Should be able to find the solution with the knowledge of the term duration as an indicator of the price volatility of a bond. A. Equal to 15 years B. More than 15 years C. Less than 15 years D. None of the aboveFinance question :- the current yield curve for default-free zero coupon bonds are: 1-year 7%; 2-year 8%; 3-year 9%. after one year, what will be the ytm of a bond with 2 years left till matuirty if market expectations are accurate a. 9.01% b. 9.51% c. 10.01% d. 13.02% e. none of the above
- Consider the following zero‐coupon yields on default free securities: Maturity (years) 1 2 3 4 5 Zero‐Coupon YTM 5.80% 5.50% 5.20% 5.00% 4.80% The price today of a 3 year default free security with a face value of $1000 and an annual coupon rate of 6% is closest to: A. $1024.36 B. $1021 C. $1013 D. $1032The current yield curve for default-free zero-coupon bonds is as follows: Maturity (Years) 1 YTM (%) 6% 7 9 2 3 Required: a. What are the implied 1-year forward rates? b. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on 1-year zero-coupon bonds next year? c. Assume that the pure expectations hypothesis of the term structure is correct. If market expectations are accurate, what will be the yield to maturity on 2-year zero-coupon bonds next year? d. If you purchase a 2-year zero-coupon bond now, what is the expected total rate of return over the next year? Ignore taxes. e. What is the expected total rate of return over the next year on a 3-year zero-coupon bond? f. What should be the current price of a 3-year maturity bond with a 9% coupon rate paid annually? g. If you purchased the coupon bond at the price you computed in part (f), what would your total expected rate of return be…Which of the following bonds will provide the largest capital gain if interest rates decrease? 02-year 6% coupon Treasury 10-year 6% coupon Treasury O15-year 6 % coupon Treasury 030-year zero coupon Treasury R
- The yield curve for default-free zero-coupon bonds is currently as follows: Maturity (years) 1 2 3 YTM 9% 11 13 Assume that the pure expectations hypothesis of the term structure is correct. What is the market expectation for the YTM of a one-year zero-coupon bond to be issued a year from now? Enter your answer as a percentage. For example, if your answer is 0.1234 or 12.34%, enter "12.34".Which type of bonds will have more volatile prices and returns? A. 30-year Treasuries B. 10-year TreasuriesAssume the zero-coupon yields on default-free securities are as summarized in the following table: (Click on the following icon in order to copy its contents into a spreadsheet.) Maturity (years) 1 2 3 4 5 Zero-coupon YTM 4.30% 4.70% 5.10% 5.30% 5.50% What is the price of a five-year, zero-coupon, default-free security with a face value of $1,000 Question content area bottom Part 1 The price is ___$enter your response here.(Round to the nearest cent.)