iviamy Neview View Hal you want (A,B.C.D.E is one question ) a) Suppose a ten-year, $1,000 bond with semiannual coupons has a price of $1,077.95 and yield to maturity of 5%. What is the bond's coupon rate? [4 points] b) Suppose a ten-year, $1,000 bond with a 7% coupon rate and semiannual coupons is trading for a price of $1,074.39. What is the YTM on the bonds? (Write down the expression for YTM and then use a financial calculator or a spreadsheet program to find the answer) [4 points] c) Consider a five-year bond with 7.5 percent annual coupon, currently selling at par. Your estimate of its yield to maturity a year from today is 7.5% per year. Suppose you plan to sell your bond at the end of one year, right after receiving your coupon payment. What is your expected return on bond investment? Note: You don't need to use a calculator to answer this question, if you have sufficient knowledge on bond. Explain how you reach your answer. [4 points] d) Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. (Assume annual compounding). You hold the bond for five years before selling it. If the market interest rates are 4% when you sell it, i) what are the prices of this bond when you buy it and sell it? [4 points] 11) how much money have you gained or lost? [2 points) 111) what is the 5-yr holding period return? [2 points] iv) what is your annual holding period return? [2 points] e) Suppose a bond with a yield to maturity of 6% is selling at par. What is the value of each semiannual coupon payment? [4 points] O2 Suso vou surobocon ton voor bond with 60%. annual sounon. Vou bold the band FA E iviamy Neview View Hal you want (A,B.C.D.E is one question ) a) Suppose a ten-year, $1,000 bond with semiannual coupons has a price of $1,077.95 and yield to maturity of 5%. What is the bond's coupon rate? [4 points] b) Suppose a ten-year, $1,000 bond with a 7% coupon rate and semiannual coupons is trading for a price of $1,074.39. What is the YTM on the bonds? (Write down the expression for YTM and then use a financial calculator or a spreadsheet program to find the answer) [4 points] c) Consider a five-year bond with 7.5 percent annual coupon, currently selling at par. Your estimate of its yield to maturity a year from today is 7.5% per year. Suppose you plan to sell your bond at the end of one year, right after receiving your coupon payment. What is your expected return on bond investment? Note: You don't need to use a calculator to answer this question, if you have sufficient knowledge on bond. Explain how you reach your answer. [4 points] d) Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. (Assume annual compounding). You hold the bond for five years before selling it. If the market interest rates are 4% when you sell it, i) what are the prices of this bond when you buy it and sell it? [4 points] 11) how much money have you gained or lost? [2 points) 111) what is the 5-yr holding period return? [2 points] iv) what is your annual holding period return? [2 points] e) Suppose a bond with a yield to maturity of 6% is selling at par. What is the value of each semiannual coupon payment? [4 points] O2 Suso vou surobocon ton voor bond with 60%. annual sounon. Vou bold the band FA E
