question 15-16 fina
7 66% 18:06 k Essentials of Corporat... la will be over the next year? inal versus Real Returns. Say you own an asset that had a total retum car of 11.7 percent. If the inflation rate last year was 2.5 percent, what our real retur? ART Van Stocks Bonds LO 2 13. Using Treasury Quotes Locate the Treasury issue in Figure 6.3 maturing in August 2029. What is its coupon rate? What is the dollar bid price for a 51.000 per value bond? What was the previously asked price for a $1.000 par valued LO 2 14. Using Treasury Quotes Locate the Treasury bond in Figure 63 maturing in February 2037. Is this a premium or a discount bond? What is its current ...read for a 51.000 par value bond 15. Zero Coupon Bonds You find a new coupon bond with a par value of $10,000 and 17 years to maturity. If the yield s maturity on this band is 4.9 percent what is the price of the band? Asume semimul compounding periods LO 2 16. Voluing Blonde. Yan Yan Corp. has a $2,000 par value bend outstanding with a coupon rate of 49 percent paid semiannually and 13 years to maturity. The yield to maturity of the bond is 3.8 percent. What is the price of the bond 0212 Valine Bonde bands outstanding with Opret 3.7 percent paid semiannually yield to maturity on these bonds is 19 percent and the hands have a par value of $5.000. What is the price of the bonds? INTERMEDIATE (Questions 1-33 LO 2 18 Bond Price Movements. Bond X is a premium bend making semiannual payments. The bond luas a coupon rate of 8.5 percent, a YTM of 7 percent. and has 13 years to maturity Bond Y is a discount bond making semiannual payments. This bood has a coupon rate of 7 percent, a YTM of 85 percent. and also has 13 years to maturity. What are the prices of these bonds today suming both bondaluve a $1.000 par value merest rates remain unchanged, what do you expect the prices of these bonds to be in one year In three years? In eight years? In 12 years. In 13 year? What's going on here Illustrate your answers by graphing bond prices versus time to maturity LO 2 19. Interest Rate Risk Beth Bend Bill and Boed Ted have 6.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 25 years to maturity If interest rates suddenly rise by 2 percent. what is the percentage change in the price of Bond Ball Of Bond Ted? Both bonds have a par value of $1.000. I rates were to suddenly fall by 2 percent instead what would the percentage change in the price of Bond Bill be then? or Bond Ted? lilustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term hands? LO 2 20. Interest Rate Risk Bond has a coupon rate of 4 percent. Bond Shasa
