3. JTM's treasury office is looking at buying a bond to earn some money on its...

 

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3. JTM's treasury office is looking at buying a bond to earn some money on its cash balances. It has four options, all semi-annual bonds, to pick from: Coupon PAR Value Market Rate A 3.3% 1,000 4.6% Coupon PAR Value Market Price B 4.1% 1,000 3.8% The market rate is the expected yield for a bond of that credit quality. They have price quotes, but they want you to calculate the prices of each bond independently. 2.88% 1,000 (983) C 4.5% 1,000 4.5% One week after you provided the prices (which were right, by the way), they ask you to calculate the yields being earned on four bonds that JTM owns. The details are: E 5.15% 1,000 (1,032) D 0.0% 1,000 3.2% 4.26% 1,000 (1,072) G 0.0% 1,000 (565) 1 2 Coupon 3 Par Value 4 Market Rate 5 Cash Flows: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 ことななななども 24 26 27 28 29 A 30 31 Price 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 1000 9.5 10.0 10.5 11.0 11.5 12.0 B A Jx C B D C H D F G Coupon Par Value Cash flows: Market Price Yield 05 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 On 7.0 7.5 8.0 85 9.0 9.5 10.0 10.5 11.0 115 12.0 H D E K G L 3. JTM's treasury office is looking at buying a bond to earn some money on its cash balances. It has four options, all semi-annual bonds, to pick from: Coupon PAR Value Market Rate A 3.3% 1,000 4.6% Coupon PAR Value Market Price B 4.1% 1,000 3.8% The market rate is the expected yield for a bond of that credit quality. They have price quotes, but they want you to calculate the prices of each bond independently. 2.88% 1,000 (983) C 4.5% 1,000 4.5% One week after you provided the prices (which were right, by the way), they ask you to calculate the yields being earned on four bonds that JTM owns. The details are: E 5.15% 1,000 (1,032) D 0.0% 1,000 3.2% 4.26% 1,000 (1,072) G 0.0% 1,000 (565) 1 2 Coupon 3 Par Value 4 Market Rate 5 Cash Flows: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 23 ことななななども 24 26 27 28 29 A 30 31 Price 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 1000 9.5 10.0 10.5 11.0 11.5 12.0 B A Jx C B D C H D F G Coupon Par Value Cash flows: Market Price Yield 05 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 On 7.0 7.5 8.0 85 9.0 9.5 10.0 10.5 11.0 115 12.0 H D E K G L

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The price of the bond refers to the current market price of the ... View the full answer