Question: a)what price would you pay for a $255m face value bond on 13 February 2020 which matures on 12 June 2023 that has a coupon

a)what price would you pay for a $255m face value bond on 13 February 2020 which matures on 12 June 2023 that has a coupon of 2.5% and is trading at a yield to maturity of 1.92%?

b. What price would you pay for a 11 May 2021 bond on 27 April 2020 when the bond has a face value of $12.35m, a coupon of 2.20% and is trading at a yield to maturity of 1.87%?

c. How much profit or loss would you make if you sold this bond on 27 June 2020 at a yield to maturity of 2.03? What is your return? What is your annualised return? Compared with long term returns from fixed income, was this a good return? Explain why?

d. What price would you pay for a $6,778,000 face value bond on 29 March 2020 that matures on 2 September 2028, has a coupon of 3.75% and is trading at 2.03%?

e. What price would you pay for a $18,127,000 face value bond on 31 July 2022 that matures on 21 February 2036, has a coupon of 2.50% and is trading at 2.07%?

f. How much profit or loss would you make if you sold this bond on 7 December 2022 at a yield to maturity of 1.97%? What is your return? What is your annualised return? Compared with long term returns from fixed income, was this a good return? Explain why?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!