Price of zero coupon bond
[DOC File]Soln Ch 13 Bond prices
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Therefore, if yields fall, capital gains on the bond will not be limited by the call price. In contrast, the 8¾% coupon bond can increase in value to at most $1,050, offering a maximum possible gain of only 0.5%. The disadvantage of the 8¾% coupon bond, in terms of vulnerability to being called, shows up in its higher promised yield to ...
[DOC File]University of Kansas
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Portfolio A consists of a one-year zero-coupon bond with a face value of $2,000 and a 10-year zero-coupon bond with a face value of $6,000. Portfolio B consists of a 5.95-year zero-coupon bond with a face value of $5,000. The current yield on all bonds is 10% …
[DOC File]Chapter 10
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Using a financial calculator, we find that the price of the zero-coupon bond (with $1000 face value) is: For yield to maturity of 8%: $374.84. For yield to maturity of 9%: $333.28. The price of the 6% coupon bond is: For yield to maturity of 8%: $774.84. For yield to maturity of 9%: $691.79. Zero coupon bond. Actual % loss, an 11.09% loss
[DOC File]Exam-type questions
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a. 20-year, zero coupon bond. * b. 10-year, zero coupon bond. c. 20-year, 10 percent coupon bond. d. 20-year, 5 percent coupon bond. The longer the maturity of a bond, the more of an effect a change in interest rates will have on it. The reason for this is that the price change is compounded into the bond price for more periods.
[DOC File]Bond Yields and Prices
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For a zero coupon bond . YTM= (Par Value/Price)1/n -1. Investors earn the YTM if the bond is held to maturity, all coupons are reinvested at YTM, and rates do not change. Other Yields. Treasury bill yields: Discount yield (d): where n is number of days to maturity; price is expressed in dollars per $100 of par value or face amount.
[DOC File]Quantitative Problem Chapter 3
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For a given yield to maturity, a bond’s value rises as its maturity increases. When yield to maturity equals the coupon rate, a bond’s current price equals its face value regardless of years to maturity. 4. Consider a coupon bond that has a $1,000 per value and a coupon rate of 10%.
[DOC File]Chapter 01 Quiz A
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_____ 8. A zero coupon bond has a yield to maturity of 6.33 percent and 12 years until it fully matures. What is . the current price of this bond if the face value is $1,000? a. $473.39 b. $478.77 c. $688.04 d. $692.51 _____ 9. An annual, ten-year bond is currently selling for $1,037.86 and has a …
[DOC File]ch8man.wpd - Sharif
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To get the price P per $1 face value of the 2-year zero-coupon bond, using the same reasoning: 1.0092 – 0.06x0.95 = 1.06xP, hence P = 0.8983 To find the entries for bond 3: first find the price…
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