Assume that an investor is looking at two bonds: Bond A 9% p. a Bond B...
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Assume that an investor is looking at two bonds: Bond A 9% p. a Bond B 8% p. a Semianually 5 years Annually 10 years 5 years RM 1,000 RM 1,050 RM980 RM 1,000 Coupon Interest Coupon payment Maturity Callable in Par Value Call Price Market price a) Calculate the yield-to-call of Bond A b) Calculate the yield-to-maturity of Bond A and B 2. Determine the value of a zero coupon bond with a 3 year to maturity and market interest of 6% per annum. 3. Determine value of the following bonds: Bond 1 8.5% p.a Coupon interest Required rate Coupon payment Maturity Par Value RM1,180 10% Annually 10 years RM1,000 Bond 2 10% p.a 8% Semianually 5 years RM1,000 4. You own a bond that pays RM100 annual interest with a RM1,000 par value. The bond matures in 10 years. Your required rate of re- turn is 12%. a) Calculate the value of bond. b) If your required rate of return increases to 15%, what is the bond value? c) If the bond pays semiannual interest and your required rate of re- turn is decreases to 10%, what is the value of bond? 5. A bond pays a semiannual interest payment of RM35 have a par value of RM1,000 and a market price of RM900. What is the current yield of this bond? 6. You own a bond that has par value of RM1,000, pays annual inter- est of 8%. If the bond present value is RM1,100 and current market price is RM1,000. Would you sell your bond? Briefly explain. Assume that an investor is looking at two bonds: Bond A 9% p. a Bond B 8% p. a Semianually 5 years Annually 10 years 5 years RM 1,000 RM 1,050 RM980 RM 1,000 Coupon Interest Coupon payment Maturity Callable in Par Value Call Price Market price a) Calculate the yield-to-call of Bond A b) Calculate the yield-to-maturity of Bond A and B 2. Determine the value of a zero coupon bond with a 3 year to maturity and market interest of 6% per annum. 3. Determine value of the following bonds: Bond 1 8.5% p.a Coupon interest Required rate Coupon payment Maturity Par Value RM1,180 10% Annually 10 years RM1,000 Bond 2 10% p.a 8% Semianually 5 years RM1,000 4. You own a bond that pays RM100 annual interest with a RM1,000 par value. The bond matures in 10 years. Your required rate of re- turn is 12%. a) Calculate the value of bond. b) If your required rate of return increases to 15%, what is the bond value? c) If the bond pays semiannual interest and your required rate of re- turn is decreases to 10%, what is the value of bond? 5. A bond pays a semiannual interest payment of RM35 have a par value of RM1,000 and a market price of RM900. What is the current yield of this bond? 6. You own a bond that has par value of RM1,000, pays annual inter- est of 8%. If the bond present value is RM1,100 and current market price is RM1,000. Would you sell your bond? Briefly explain.
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Bond A 1 Yieldtocall of Bond A Given Coupon rate 9 pa Coupon payment frequency Annual Par value RM1000 Call price RM1050 Call year 5 Calculation Interest payment per year Coupon rate x Par value 9 x R... View the full answer
Related Book For
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
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