General Mfg has an outstanding debt security with a final maturity of 3 years and makes 6% coupons on an annual basis. If the yield to maturity on this security is 7.00 % , the duration of said security is The security is currently trading at [Select] [Select] General Mfg is considering the issuance of a zero coupon bond with a final maturity of 10 years. The duration the bond is [Select]
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![General Mfg has an outstanding debt security with a final maturity of 3 years and makes 6% coupons on an
annual basis. If the yield to maturity on this security is 7.00%, the duration of said security is
The security is currently trading at [Select]
[Select]
General Mfg is considering the issuance of a zero coupon bond with a final maturity of 10 years. The duration
of the bond is [Select]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d76b0ce-7373-485b-8261-c9439c1c2ac2%2Fc09fbecc-8f7f-4bd3-95af-68594b3508b1%2F5tih3y_processed.jpeg&w=3840&q=75)
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- 4) A coupon bond pays this amount every 6 months; $ 30.00 bgs for the number of payments/year; 2 The bond also pays at maturity the par (face) value; $ 1,000.00 Number of years until maturity 15 The required return of holders of this bond is; 8.00% bgs a) What is the PV of the CFs, or what would be the fair price to purchase this bond? b) If the required return of holders of this bond is; 6.00% bgs What is the PV of the CFs, or what would be the fair price to purchase this bond? c) If the required return of holders of this bond is; 4.00% What is the PV of the CFs, or what would be the fair price to purchase this bond? to purchase this bond? bgs d) If the previous bond sells for; $ (976.00) What must be the yield to maturity for this bond (aka IRR) ? (to…A coupon bond that pays interest annually, has a par value of P1,000, matures in 5 years, and has a yield to maturity of 10%. The market price of the bond today will be if the coupon rate is 12%. Group of answer choices P1,077.20 P922.77 P1,075.82 P924.16A 30-year maturity bond making annual coupon payments with a coupon rate of 11.00% has a ation of 13.50 years. The bond currently sells at a yield to maturity of 5.75%. Ducation a. Find the exact dollar price of the bond if its yield to maturity falls to 4.75%. What is the % change in price? b. Assume that you need to make a quick approximation using the duration rule. What is the % change in price as approximated by the duration rule when the yield to maturity falls to 4.75%? c. Does the duration-rule provide a good approximation of the % price change in this case? Why or why not?
- Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of R1 000 is currently selling for R1 135.90, producing a nominal yield to maturity of 8 percent. However, the bond can be called after 5 years for a price of R1 050. If you bought this bond, do you think you would be more likely to earn theYTM or the YTC? Why?Case: Consider a bond has 4 years to maturity and pays coupon payments of £70 annually and its par value is £1500. Moreover, the yield to maturity is 6% and compounded annually. Q1: What is the bond price? Hint: apply the present value operator. * I 1430.69 7 1530.67 8 1330.67 8 1530.69 7 Q2: Which one of the following options does provide Macaulay and modified durations, respectively? 3.433 and 3.222 O 3.733 and 3.522 3.533 and 3.322 3.433 and 3.122 Q3: Suppose that yield compounded annually on the bond increases by 1% from the original yield. Which one of the following options does state the bond's approximated price using modified duration? * 1180.30 8 1380.30 8 1280.30 8 1480.30 8How does the equation for valuing a bond change if semiannual payments are made? Find the value of a 10-year, semiannual payment, 10 percent coupon bond if nominal rd = 13%. Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of R1 000 is currently selling for R1 135.90, producing a nominal yield to maturity of 8 percent. However, the bond can be called after 5 years for a price of R1 050. i) What is the bond’s nominal yield to call? ii) If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why? 2.3 You have been provided with the following options. A 10-year, R1000 face value, 10 percent coupon bond with semiannual interest A 10-year, R1000 face value, 10 percent coupon bond with annual interest A 10-year, R1000 face value, zero coupon bond. A 10-year R100 annuity. Determine which one poses the highest price risk. 2.4 Which of these five statement is…
- Consider a bond with a face value of $1,000 that sells for an initial price of $700. It will pay no coupons for the first nine years and will then pay 11% coupons for the remaining 29 years. Choose an equation showing the relationship between the price of the bond, the coupon (in dollars), and the yield to maturity. O A. B. O C. O D. 700 = 700 = 700 = 700 = 110 110 9 (1+i)⁹ (1+i)⁹+1 + 110 + i) ⁹ + 1 (1 + 1,000 (1+i) 29-9 1,000 (1 + i) 9 +29 + +...+ 110 (1+i) 9+2 + 110 (1 + i)9+29-1 110 + (1 + i) ⁹ + 110 (1+i)9 +29 9+29-1 + 110 (1 + i)9 +29 + 1,000 (1+i) 9+29i)A risk-free, zero coupon bond with a face value of $5,000 has 10 years to maturity. If the YTM is 3.25%, at what price will the bond trade? (ii) What is the price of a $10,000 bond with a 4.5% coupon rate with quarterly coupon payments, and 7 years to maturity if it has a YTM of 6?Consider a zero-coupon bond with a $1,000 face value and 10 years to maturity. The price this bond will trade if the Yield To Maturity is 7.1% is closest to: A) $604.35 B) $805.8 C) $705.07 D) $503.62
- A 2-year maturity bond with face value of $1,000 makes annual coupon payments of $108 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is: Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Rate of Return a. 6% 10.80% b. 10.8% c. 12.8% 10.80% 10.80 %Consider the following coupon bond issued by XYZ.inc Term: 1 year Payment: 100 Face Value: 1,500 Currently the prevailing risk free rate is 0.01 and the market places a risk premium on XYZ.inc bonds of 0.09 Compute the present value of an XYZ.inc bond? Record your unitless answer to the nearest cent. Your Answer:Required Information: What is the current price and Macaulay's duration of a $1,000, 8% coupon bond that pays interest semi-annually if the bond matures in ten years and has a yield-to-maturity of 9.65%? Using the above information: If interst rates are expected to decrease by 150 basis points, with convexity of 68.975, what is the price of the bond using the traditional method, duration rule, and duration-with-convexity rule?