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Chap010 - C hapter 10 B ond Prices and Yields CHAPTER 10...

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Chapter 10 - Bond Prices and Yields 10-1 CHAPTER 10 BOND PRICES AND YIELDS 1. 2. . 3.

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Chapter 10 - Bond Prices and Yields 10-2 4. at a price of 117 the invoice price is = \$1,174.95 5. Using a financial calculator, PV = -746.22, FV = 1,000, t=5, pmt = 0. The YTM is 6.0295%. Using a financial calculator, PV = -730.00, FV = 1,000, t=5, pmt = 0. The YTM is 6.4965%. 6. . 7. . 8. . 9. Current yield = 4.95% 10. The HPR = .0061 or 0.61% gain. 11. . 12. a. Effective annual rate on three-month T-bill: % 00 . 10 1000 . 0 1 ) 02412 . 1 ( 1 645 , 97 000 , 100 4 4 = = = Ο৿ Πਏ Ξ৯ Μ৏ Νয় Λি b. Effective annual interest rate on coupon bond paying 5% semiannually: = 10.25% Therefore, the coupon bond has the higher effective annual interest rate. 13.
Chapter 10 - Bond Prices and Yields 10-3 14. a. The bond pays \$50 every six months. Current price: \$1,052.42 Assuming the market interest rate remains 4% per half year, price six months from now: \$1,044.52 b. Rate of return = months six per % 00 . 4 0400 . 0 42 . 052 , 1 \$ 90 . 7 \$ 50 \$ 42 . 052 , 1 \$ ) 42 . 052 , 1 \$ 52 . 044 , 1 (\$ 50 \$ = = = + 15. a. Effective annual yield to maturity = 8.70% b. Effective annual yield to maturity = 8.16% c. .

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