A 10-year bond has just been issued with its coupon rate set at the current market yield of 6 percent. How much would the price of the bond change (in percentage terms) if the market yields suddenly fell by 50 basis points? How much would the price change if the yield rose by 50 basis points?
Answer to relevant QuestionsConsider a bond with five years to maturity, FV of $1,000, and a coupon rate of 6.5 percent (semi-annual payments). a. Calculate the price of this bond if the market yield is: i) 7.75 percent ii) 5.25 percentb. In each ...A bond is currently trading at $825. It has 12 years to maturity. If you require a rate of return of 12 percent, what should be the bond’s coupon rate if the bond pays semi-annual coupons?a. What is the value of a 10-year zero coupon bond with a face value of $1,000 when the market rate is 8 percent.b. Calculate the YTM of the above zero coupon bond if the current price is $760.Adam has saved C$1,000 and plans to go surfing in Australia next summer. He won’t need the money for a year, so he decides to invest it. Adam could invest the money in Canada, where a T-bill will earn 4.5 percent, and then ...1. Park Recreational Vehicles Ltd. shares are currently selling for $37.50 each. You bought 200 shares one year ago at $34 and received dividend payments of $1.50 per share. What was your total dollar capital gain this ...
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