Question: On August 15, 2016, an 8 year bond (maturing on August 15, 2024) with a coupon rate of 2.50%, semiannual coupons, and a face value

On August 15, 2016, an 8 year bond (maturing on August 15, 2024) with a coupon rate of 2.50%, semiannual coupons, and a face value of $100 was trading at a yield to maturity of 1.57%. (a) What was the price of the bond on August 15, 2016? On August 15, 2021, the same bond (maturing on August 15, 2024) was now trading at a yield to maturity of 0.65%. (b) What was the price of the bond on August 15, 2021? (c) If you bought the bond on August 15, 2016, and sold it after the receiving the coupons through and including on August 15, 2021, what annual rate of return (APR) would you receive on this investment? How does your realized rate of return compare to the yield to maturity when you first purchased the bond?

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!

Question 5. (8 points) On August 15, 2016, a 5 year bond (maturing on August 15, 2021) with a coupon rate of 1.875%, semiannual coupons, and a face value of $1000 was trading at a yield to maturity...

This is a question for my financial managment class. I could use some help with the formulas and solutions. help find the present value and return rate. Risk free rate of return, pirtfolio rate of...

The last exam will cover these 3 tests plus a few small quizzes. The attached should give you a good idea of the material. Let me know if you have any questions. You can see which I got correct with...

a. b. c. Suppose a seven-year, $1,000 bond with an 8.3% coupon rate and semiannual coupons is trading with a yield to maturity of 6.46%. a. Is this bond currently trading at a discount, at par, or at...

Questions: D-F, There is another post for A-C....

I need assistance with completing this homework assignment FI 389 Spring 2016 Cooper FI 389 Homework 4 1. A company has a dividend payout ratio of 40%. It is expected to earn $4.20 per share next...

What is the current yield of a 6 - year Treasury note with a coupon rate of 7 % , a face value of $ 1 0 0 , and is currently trading at 1 0 0 : 1 0 ? Below is a list of prices for $ 1 , 0 0 0 - par...

Hi, please answer clearly. thank you! 29) The following table gives the available projects in Smillions) for a fim. A 90 130 B 20 70 C 60 65 D 50 10 E F G 150402 Titial investment 30 32 10 NPU If the...

-Suppose a 10-year, $1,000 bond with a 9% coupon rate and semiannual coupons is trading for a price of $1,043.22. a. What is thebond's yield to maturity(expressed as an APR with...

End of chapter problem # 2 and 8 Balance sheet and income statement Kuipers, Inc. 2010 Income Statement ($ in millions) Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest...

(a) Set up an integral for the area of the surface obtained by rotating the curve about (i) the -axis and (ii) the -axis. (b) Use the numerical integration capability of your calculator to evaluate...

Use the information for Kyle Inc. given in BE18-13, but assume instead that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Prepare all the...

18. Price and Quality of Headphones. The following data show the brand, price ($), and the overall score for six stereo headphones that were tested by Consumer Reports (Consumer Reports website). The...

A random sample of 43 biology students in a science program are selected for a study. Of those selected, only 27 passed the mid term exam. At the 5% significance level, is there sufficient evidence...

6. Describe why communication is vital to everyone

2. Think of someone (a family member, a celebrity, a politician, a friend, a professor) who exhibits competent communication in a particular context. What behaviors does this person exhibit that make...

3. Keep a log of all the different channels (face to face, written, computer mediated, telephonic, others) you use to communicate during the course of one morning or afternoon. Do you regularly...