You purchased a 15-year, 4.8 percent coupon bond that was priced at 102.594% of par TWO years ago. The bond paid tri-annual coupons (i.e., once every four months). Right after you purchased the bond, interest rates rose to 6.0 percent and remained unchanged since then. You liquidated your position by selling the bond for its market price at the end of the 2-year horizon. Calculate the (annual) rate of return realized on your investment.

You purchased a 15-year, 4.8 percent coupon bond that was priced at 102.594% of par TWO years ago. The bond paid tri-annual coupons (i.e., once every four months). Right after you purchased the bond, interest rates rose to 6.0 percent and remained unchanged since then. You liquidated your position by selling the bond for its market price at the end of the 2-year horizon. Calculate the (annual) rate of return realized on your investment.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You purchased a zero-coupon bond one year ago for $278.33. The market interest rate is now 8 percent. Assume semiannual compounding. If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Total return for the past year %
You purchased a $1000 face value zero-coupon bond one year ago for $260.3. The market interest rate is now 7.36 percent. If the bond had 19 years to maturity when you originally purchased it, what was your total return for the past year?Assume semiannual compounding. Answer as a percentage to two decimals (if you get -0.0435, you should answer -4.35).
You purchased a 5-year annual-interest coupon bond year agoIts coupon interest rate was 6%, and its par value was $1,000 At the time you purchased the bond, the to maturity was 4%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 3%, your annual total rate of return on holding the bond for that year would have been approximately BLANK. Answer in percent form and round to 2 decimal places.
2) You purchased an annual-interest coupon bond one year ago with six years remaining to maturity at the time of purchase. The coupon interest rate is 10%, and par value is $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 7%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 8.00%. C) 9.95%. D) 11.95%. E) None of the options are correct.
2) You purchased an annual-interest coupon bond one year ago with six years remaining to maturity at the time of purchase. The coupon interest rate is 10%, and par value is $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 7%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 8.00%. C) 9.95%. D) 11.95%. E) None of the options are correct. Provide an accurate answer with justification.
You purchased a zero-coupon bond one year ago for $76.00. The market interest rate is now 9.0 percent. If the bond had 30 years to maturity when you originally purchased it, what was your total return for the past year? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Total return of past year %
You buy an 8-year, 3.30% annual - payment coupon bond priced to yield 5.30 %. You sell the bond at year - end, immediately after receiving the first coupon payment. Assuming the YTM stayed constant over the holding period, what are your capital gains from the sale of the bond? A. -0.09 B. -0.02 C. 0.02 D. 0.09
5) Three years ago, you purchased a bond for $974.69. The bond had three years to maturity, a coupon rate of 8%, paid annually, and a face value of $1,000. Each year, you reinvested all coupon interest at the prevailing reinvestment rate shown in the table below. Today is the bond's maturity date. What is your realized compound yield on the bond? Time Prevailing Reinvestment Rate 0 (purchase date) 6.0 % 1 7.2 % 2 9.4 % 3 (maturity date) 8.2 % A) 6.43% B) 7.96% C) 8.23% D) 8.97% E) 9.13% Provide an accurate answer with justification.
a) What is the value of a 10 year, 8.2% coupon bond with semiannual coupons.Assume the par value of the bond is $100 and it is redeemable at par. The interest rate (nominal, converted semiannually) is 10.6%. b) An investor purchased a bond that pays $5 coupons annually at the end of everyyear for five years. The purchase price was $100 and it was redeemed at par after fiveyears. If the annual effective inflation rate over the time period was 3%, calculate the realrate of return earned by the investor on this bond.
You purchased an annual interest coupon bond one year ago that had six years remaining to maturity at that time. The coupon interest rate was 10%, and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 7.82%. C) 8.00%. D) 11.95%. E) None of the options are correct. Provide accurate answer with justification.
You purchased an annual interest coupon bond one year ago that had six years remaining to maturity at that time. The coupon interest rate was 10%, and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 7.82%. C) 8.00%. D) 11.95%. E) None of the options are correct. Solve the question using BAII calculator.
4 years ago you purchased a 12 year maturity, 3.3% coupon annual pay bond at a price of $90 per $100 of face value. Shortly after you purchased the bond, yields changed to 3.25%. If you sell the bond today at a price of $104 per $100 of face value, what is your annualized holding period return? Enter answer in percents, to two decimal places.

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