Assume that a bond pays a semi annual coupon of 50

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Algebra and Trigonometry: Real Mathematics, Real People
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Chapter 4 / Exercise 66
Algebra and Trigonometry: Real Mathematics, Real People
Larson
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20. Assume that a bond pays a semi-annual coupon of $50 and has a current price of $1,113.14879. Also assume that in one period (six months) the price of this bond will 7
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Algebra and Trigonometry: Real Mathematics, Real People
The document you are viewing contains questions related to this textbook.
Chapter 4 / Exercise 66
Algebra and Trigonometry: Real Mathematics, Real People
Larson
Expert Verified
Chapter 7 decrease to $1,111.23682. Given this information, determine the annual yield to maturity for this bond.
Summer 2015 8
Chapter 7 15. Assume that a 10-year bond pays interest of $36 every six months and will mature for $1,000. Also assume that the yield to maturity on this bond is currently 7.98 percent. Given this information, determine the current price of this bond.
15. Assume that a 10-year bond pays interest of $36 every six months and will mature for $1,000. Also assume that the yield to maturity on this bond is currently 7.98 percent. Given this information, determine the current price of this bond. 9
Chapter 7 *
Duration 10
Chapter 7 9. Assume that you are given the following cash flows for a bond that pays an annual coupon of $95 and matures for $1,000. Given this information, determine the duration of this bond if the annual yield-to-maturity is 12.0 percent. Year Cash Flow 1 $95.00 2 $95.00 3 $95.00 4 $95.00 5 $1,095.00 A. 4.16 years B. 4.34 years C. 4.51 years D. 4.69 years E. 4.86 years
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Chapter 7 9. Assume that you are given the following cash flows for a bond that pays an annual coupon of $95 and matures for $1,000. Given this information, determine the duration of this bond if the annual yield-to-maturity is 12.0 percent. Year Cash Flow 1 $95.00 2 $95.00 3 $95.00 4 $95.00 5 $1,095.00 *
2010 12
Chapter 7 25. Assume that you purchase a 5-year bond that has a par value of $1,000, annual coupon payments of $90 each year, and a current price of $891.86. Based on this information, determine the duration (in years) of this bond if the annual yield-to-maturity is 12.0 percent. A table has been provided to help you organize your calculations. Year Cash Flow Weighted Cash Flow PV of Cash Flow PV of Weighted Cash Flow 1 $90.00 $80.36 2 $90.00 $71.75 3 $90.00 $64.06 4 $90.00 $57.20 5 $1,090.00 $618.50 Value = $891.86
25. Assume that you purchase a 5-year bond that has a par value of $1,000, annual coupon payments of $90 each year, and a current price of $891.86. Based on this information, 13
Chapter 7 determine the duration (in years) of this bond if the annual yield-to-maturity is 12.0 percent. A table has been provided to help you organize your calculations. Year Cash Flow Weighted Cash Flow PV of Cash Flow PV of Weighted Cash Flow 1 $90.00 $80.36 2 $90.00 $71.75 3 $90.00 $64.06 4 $90.00 $57.20 5 $1,090.00 $618.50 Value = $891.86
Year Cash Flow Weighted Cash Flow PV of Cash Flow PV of Weighted Cash Flow 1 $90.00 $90.00 $80.36 $80.36 2 $90.00 $180.00 $71.75 $143.49 3 $90.00 $270.00 $64.06 $192.18 4 $90.00 $360.00 $57.20 $228.79 5 $1,090.00 $5,450.00 $618.50 $3,092.48 Value = $891.86 $3,737.30 Duration = $3,737.30 / $891.86 = 4.19 2012 14
Chapter 7

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