Question
1a.Suppose a seven-year, $1,000 bond with a(n) 6.76% coupon rate and semiannual coupons is trading with a yield to maturity of 4.05%.If the yield to
1a.Suppose a seven-year, $1,000 bond with a(n) 6.76% coupon rate and semiannual coupons is trading with a yield to maturity of 4.05%.If the yield to maturity of the bond rises to 4.66% (APR with semiannual compounding), at what price will the bond trade?
1b.Suppose that Ally Financial Inc. issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was12%. a. What was the price of this bond when it was issued? b. Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment? c. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?
1c.Assume the zero-coupon yields on default-free securities are as summarized in the following table:
Maturity (years) | 1 | 2 | 3 | 4 | 5 |
Zero-coupon YTM | 4.00% | 4.30% | 4.50% | 4.70% | 4.80% |
What is the price of a five-year, zero-coupon, default-free security with a face value of $1,000?The price is ________? (Round to the nearest cent.)
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