A bond has a 5% coupon rate, and matures in 18 years, and has par value...
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A bond has a 5% coupon rate, and matures in 18 years, and has par value $1000. Find the price of the bond today if the yield to maturity is 4% first assuming annual payments, then again with semi-annual. 2. What is the yield to maturity on a semiannual bond with a 9% coupon rate, $1000 par value, and 3 years to maturity if the price of the bond today is $800? 3. Consider two bonds, both with a current YTM of 3.6%. The first pays no coupon (Cr=0%) and matures in 26 years. The second pays an 8% coupon annually and matures in 4 years. a) Find the price of both bonds under the current YTM of 3.6% b) Find the price of both bonds if yields drop to 3.3% and the % change in price c) Find the price of both bonds if yields rise to 3.9% and the % change in price d) Which bond has more interest rate risk? A bond has a 5% coupon rate, and matures in 18 years, and has par value $1000. Find the price of the bond today if the yield to maturity is 4% first assuming annual payments, then again with semi-annual. 2. What is the yield to maturity on a semiannual bond with a 9% coupon rate, $1000 par value, and 3 years to maturity if the price of the bond today is $800? 3. Consider two bonds, both with a current YTM of 3.6%. The first pays no coupon (Cr=0%) and matures in 26 years. The second pays an 8% coupon annually and matures in 4 years. a) Find the price of both bonds under the current YTM of 3.6% b) Find the price of both bonds if yields drop to 3.3% and the % change in price c) Find the price of both bonds if yields rise to 3.9% and the % change in price d) Which bond has more interest rate risk?
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Answer rating: 100% (QA)
1 Annual Payments To calculate the price of the bond with annual payments we can use the formula for the present value of a bond Price Coupon Payment ... View the full answer
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