1. Oneyearago,youpurchased atwo-yearzero-couponbondwith ayield-to-maturity at the time of 8%. Interest rates have risen, and the current yield to maturity on the bond is currently 9%.If you sell the bond right now, what will be your realized return over the past year?
2. You purchase a $1,000 face value bond paying annual coupon payments at a couponrateof6%.Thisyear'scouponpaymenthas alreadybeenmade,thebondhasoneyear left until maturity, and the yield on the bond is 8%.What is the current price of the bond?
3. Azero couponbondthatmaturesin1yearwithafacevalueof$1,000currently sells for $869.56.What is the yield to maturity of the bond?
4. Supposetoday,atdate0, thecurrentforwardinterestratebetween date1 and date2 is .10. Undertheliquidity premiumhypothesis,whatisthecurrentexpectedvaluefor thedate1price of a zero-coupon bond that pays $1,100 at date 2?
5. Suppose today, at date 0, the current forward interest rate between date 1 and date 2 is 1/4. Underthepure expectationshypothesis, what isthecurrentexpectedvalueforthedate1priceof a zero coupon bond that pays $2,000 at date 2?
6. You have two 10-year bond portfolios that make irregular semi-annual coupon payments as follows: The first bond portfolio has coupon payments of $50 in period 10 and 11 (i.e., after 5 years and after 5.5 years) and repays a face value of $1,000 at period 20 (i.e., after 10years).Thesecondbondportfoliohas couponpaymentsof$50inperiod1andperiod20and repays afacevalueof$1,000 atperiod20.The term structureofinterestrates is currentlyflatat 4% per semi-annual (6 month) period (i.e., r1=4%, r2=4%, r3=4%, r4=4% ......).What are thecurrent prices of the two bond portfolios?