coupon bond practice problems

Practice Problems # Answers posted September 20th. The yield to maturity on this bond is a) 6.00% b) 8.33% c) 10.39% d) 12.00% e) 60.00% 9. P RACTICE E XAM P ROBLEMS SM132 Practice Exam Problems Bonds 2 1. The company wishes to immunize its position by investing in two zero coupon bonds \(X\) and \(Y\), whose terms are 4 and 7 years respectively at an effective rate of interest of 10%. BUAD 306, Fall 2017. Get access to over 500 exam-style Financial Mathematics Practice Problems. If The Yield To Maturity On This Bond Is 4.9 Percent, What Is The Price Of The Bond? A zero-coupon bond that matures in 10 years is currently sells of $527.47 per $1,000 par value. What is the promised yield? The number of zero coupon bonds to sell would be: Price of zero coupon bonds = $1,000 / 1.0340 Price of zero coupon bonds = $306.56 Number of zero coupon bonds to sell = $47,000,000 / $306.56 Number of zero coupon bonds to sell = 153,316 b. Assume Semiannual Compounding Periods. Calculate the following: Macauley duration Modified duration Effective duration Percentage change in price for a 1% increase in the yield to maturity Problem 2 Calculate the promised yield on this bond. Problem B A bond with a BBB rating has a face value of $1,000 & a coupon rate of 8%, paying semi-annually. The repayment of the coupon bond will be the par value plus the last coupon payment times the Calculate the current price of a $1,000 par value bond that has a coupon rate of 6% p.a., pays coupon interest annually, has 14 years remaining to maturity, and has a yield to maturity of 8 percent. A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in 5 years, and is selling today at a $72 discount from par value. A zero-coupon bond that matures in 14 years is currently selling for $256 per $1,000 par value. Question: You Find A Zero Coupon Bond With A Par Value Of $10,000 And 17 Years To Maturity. Professor Yaron Levi. A coupon bond is a type of bond Bonds Bonds are fixed-income securities that are issued by corporations and governments to raise capital. A university issues a bond with a face value of $10,000 and a coupon rate of 5.65% that matures on 7/15/2025. Comparing a long put position with a short call position reveals the following common What is a Coupon Bond? Duration problems Created by Pamela Peterson Drake Problem 1 Consider a bond that has a coupon rate of 5%, five years to maturity, and is currently priced to yield 6%. With coupon bonds, there are … Therefore, each bond will be priced at $1,041.58 and said to be traded at a premium (bond price higher than par value) because the coupon rate is higher than the YTM.. Relevance and Uses. Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. The concept of pricing of this kind of bond is very important from the perspective of an investor because bonds are an indispensable part of the capital markets. A coupon bond, also referred to as a bearer bond or bond coupon, is a debt obligation with coupons attached that represent semiannual interest payments. MBA 8135 Practice Bond Valuation Problems SOLUTIONS 1. = $1,041.58. Problems and Solutions 1 CHAPTER 1—Problems 1.1 Problems on Bonds Exercise 1.1 On 12/04/01, consider a fixed-coupon bond whose features are the following: • face value: $1,000 • coupon rate: 8% • coupon frequency: semiannual • maturity: 05/06/04 What are the future cash flows delivered by this bond? The bond issuer borrows capital from the bondholder and makes fixed payments to them at a fixed (or variable) interest rate for a specified period. … The bond will mature in 10 years. Assuming annual coupons, find the yield-to-maturity for each of the following bonds. The holder of this bond receives coupon payments of $282.50.

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