Question
1.Aloha Inc. has 5 percent coupon bonds on the market that have 9 years left to maturity. If the YTM on these bonds is 5.4
1.Aloha Inc. has 5 percent coupon bonds on the market that have 9 years left to maturity. If the YTM on these bonds is 5.4 percent, what is the current bond price? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
2. Rolling Company bonds have a coupon rate of 8.00 percent, 24 years to maturity, and a current price of $1,186. What is the YTM? The current yield? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
YTM | % |
Current yield | % |
3. Atlantis Fisheries issues zero coupon bonds on the market at a price of $514 per bond. Each bond has a face value of $1,000 payable at maturity in 13 years. What is the yield to maturity for these bonds?(Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Yield to maturity | % |
4. Atlantis Fisheries issues zero coupon bonds on the market at a price of $364 per bond. Each bond has a face value of $1,000 payable at maturity in 18 years. It is callable in 9 years at a call price of $550. Using semiannual compounding, what is the yield to call for these bonds? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Yield to call | % |
5. Atlantis Fisheries issues zero coupon bonds on the market at a price of $514 per bond. Each bond has a face value of $1,000 payable at maturity in 14 years. It is callable in 7 years at a call price of $640. Using semiannual compounding, what is the yield to call for these bonds? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Yield to call | % |
6. Great Wall Pizzeria issued 4-year bonds one year ago at a coupon rate of 5.2 percent. If the YTM on these bonds is 7.6 percent, what is the current bond price? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
7. Sopranos Spaghetti Factory issued 20-year bonds two years ago at a coupon rate of 6.80 percent. If these bonds currently sell for 90.5 percent of par value, what is the YTM? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
YTM | % | |
8. Both bond A and bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while bond B has 20 years to maturity. |
a) | Assume if interest rates suddenly rise by 2 percent, what is the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Negative answers should be indicated by a minus sign. Omit the "%" sign in your response.) |
Bond A | % |
Bond B | % |
b) | Assume if interest rates suddenly fall by 2 percent instead, what would the percentage change in price of bond A and bond B? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Bond A | % |
Bond B | % |
9. Suppose you buy a 7.2 percent coupon bond today for $1,140. The bond has 10 years to maturity. |
a. | What rate of return do you expect to earn on your investment? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Rate of return | % |
b-1. | Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell. What price will your bond sell for? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
b-2. | What is the annual realized yield on your investment? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
Realized return | % |
10. What is the Macaulay duration of a 10.4 percent coupon bond with five years to maturity and a current price of $974.60? What is the modified duration? (Round your answer to 3 decimal places.) |
Duration | |
Macaulay | Years |
Modified | Years |
11. Consider a 9.00 percent coupon bond with six years to maturity and a current price of $958.50. Suppose the yield on the bond suddenly increases by 2 percent. |
1. | Use duration to estimate the new price of the bond. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
2. | Calculate the new bond price. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
12. A Treasury bond with 8 years to maturity is currently quoted at 108:7. The bond has a coupon rate of 8.3 percent. What is the yield value of a 32nd for this bond? (Round your answer to 3 decimal places.) |
Yield value (in basis point) |
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