A US Treasury note with 5-years to maturity currently trades for$97.865 per $100 of face value. The
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2. A bond paying a 3% coupon rate (annual payments) with 10 years to maturity has a currentyield of 4.2% (this refers to the 'current yield' and not the yield to maturity). Does thebond trade at a premium, discount, or at par? What are the current bond price (per $100of face value) and yield to maturity?
3. Consider two zero coupon bonds, both with face value of $1,000. One matures in 6 monthsand the other in 18 months. Suppose that the discount rate (YTM) on the bond is 6% (treatthis as an 'APR' using semiannual compounding). What are the corresponding prices forthe two zero coupon bonds?
4. A zero coupon bond trades for $98 per $100 of face value. Assuming the appropriatediscount rate for the bond equal 5% (EAR), what is the time to maturity for the bond?
5. You have just purchased a 12-year zero-coupon bond with a yield to maturity of 9% and apar value of $1,000. Suppose you sell the bond one year from now. Determine the holding
period return, assuming that the YTM on the bond is 10% when you sell.
Related Book For
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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