Suppose that Ford issues a coupon bonds at a price of $1,000, which is the same as the bond's par value. Assume the bond has a coupon rate of 4.5%, pays the coupon once per year, and has a maturity of 20 years. If an investor purchased this bond at the price of $1,000, for each year except the last year, the investor would receive a payment of $ (Round your answers to the nearest dollar.)

Suppose that Ford issues a coupon bonds at a price of $1,000, which is the same as the bond's par value. Assume the bond has a coupon rate of 4.5%, pays the coupon once per year, and has a maturity of 20 years. If an investor purchased this bond at the price of $1,000, for each year except the last year, the investor would receive a payment of $ (Round your answers to the nearest dollar.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

Suppose that the prices of zero-coupon bonds with various maturities are given in the following table. The face value of each bond is $1,000. Maturity (Years) Price 1 $ 998.78 2 880.89 3 815.92 4 752.40 5 685.70 a. Calculate the forward rate of interest for each year. (Round your answers to 2 decimal places.) b. How could you construct a 1-year forward loan beginning in year 3? (Round your Rate of synthetic loan answer to 2 decimal places.) c. How could you construct a 1-year forward loan beginning in year 4? (Round your answers to 2 decimal places.)
Suppose that for a price of $960 you purchase a 7-year Treasury bond that has a face value of $1,000 and a coupon rate of 4%. If you sell the bond one year later for $1,120, what was your rate of return for that one-year holding period? The rate of return for the one-year holding period was %. (Round your response to one decimal place.)
Suppose the investor sells his bonds before maturity and uses some of the proceeds to purchase a zero-coupon T-Bill with a $100 face value and 6-month maturity. What is the effective annual rate (EAR) if it was purchased for $95.52?
Suppose you purchased one of SWH's bonds on the day it was issued. The bond had a coupon rate of 5.5% (paid semiannually), the par value of $1,000, and a 15-year maturity. The investors' required rate of return at the time of issue was 5.5%. How much would you have paid to purchase the bond? Vb = $1,000 ✔Assume that immediately after you purchased the bond, the market conditions changed, so the investors' rb increased from 5.5% to 6.5%. How would the value of your bond be affected? Vb ↓ to $905.09 ✔What would happen to the bond price if rb decreased from 5.5% to 4.5% immediately after the bond was issued? Vb ↑ to $1108.23 Please make sure your answer is correct. Don't answer if you are not sure. don't use chat gpt as well. Thank you
What is the Macaulay duration of a 7 percent semiannual coupon bond with two years to maturity and a current price of $1,055.30? (Note: You are required to solve the problem by calculating "Years \times PV / Bond Price" for each cash flow and summing the results. YTM and PV must be calculated using a financial calculator. Round your answer to four decimal places.)
You buy a bond and hold it for one year. According to the information below... What is your holding period return? (Keep in mind you received coupon payments over the course of the year and that you get one year closer to maturity after the year passes by) Face Value: $1,000 YTM1 (Yield of comparable bonds) at date of purchase: 4% YTM2 (Yield of comparable bonds) at date of sale, end of the year: 6% Coupon: 4% Maturity: 26 years A
Your client is considering the purchase of a bond that is currently selling for $1112.09. The client wants to know what annual rate of return can they expect to earn on the bond. The bond has 22 years to maturity, pays a coupon rate of 5.5% (payments made semi-annually), and a face value of $1000. (Round to 100th of a percent and enter your answer as a percentage, e.g., 12.34 for 12.34%)
Your client is considering the purchase of a bond that is currently selling for $1058.15. The client wants to know what annual rate of return can they expect to earn on the bond. The bond has 27 years to maturity, pays a coupon rate of 7.8% (payments made semi-annually), and a face value of $1000, (Round to 100th of a percent and enter your answer as a percentage, e.g. 12.34 for 12.34%) Answer: Check
What is the value of a bond that matures in 17 years, makes an annual coupon payment of $50, and has a par value of $1,000? Assume a required rate of return of .0590. Instruction: Type your answer in dollars, and round to two decimal places
For a company, you plan to buy the following bond: Time to maturity, 6 years; coupon rate, 8%; Coupon payment, annual; Market interest rate, 8%; Face value, $1,000. Using Excel, calculate the duration of the bond. Using Excel, calculate the accumulated value of invested payment(or receipt) when you find market interest rate a year later is now 8%, 9%, and 7%, respectively. Using Excel, calculate geometric average rate of return (or realized compound return).
You purchased a coupon-bearing bond at $800 and resold it at $900 after exactly one year. If the coupon is $60 paid annually, what is the current yield of the bond? O A. 0.075 O B. 0.125 O C. 0.067 O D. 0.200
Today an investor purchases a 30-year bond (face value =\$1,000) for $627.73. The bond has a coupon rate of 4% and a yield to maturity of 7%. It pays coupons annually (not semiannually). The investor plans to hold the bond for 1 year. If the yield to maturity of the bond becomes 8% at the end of the year, what is the bond rate of return over the year?