You currently own a 25-year maturity Government of Canada bond with a face value of $1000 that was issued Oct 15, 2015 (i.e. 5 years ago) with a 6% coupon paid semi-annually. The current price of the bond is $1075.
a) What is the current YTM of this Government of Canada bond? Assume semi-annual compounding.
b) You also own a Corporate bond that will mature in 20 years. It also pays a semi-annual coupon of 6% and has a face value $1000. Its YTM is 8% compounding semi-annually. What is the current price of the bond?
c) Is the YTM of the corporate bond higher than the YTM of the comparable Government of Canada bond? What factors may be driving this difference?
d) You are considering buying another corporate bond with similar characteristics except for the added call provision in bond indenture. What possible advantages or disadvantages would this new bond offer to you? Would you require a higher or lower YTM in comparison to the corporate bond you already own?
e) Yield curves are used to predict future economic activity. What does a normal (or up-sloped) yield curve suggest? What does an inverted yield curve suggest?
You currently own a 25-year maturity Government of Canada bond with a face value of $1000...
Process and detailed explanations required Bond Valuation: You currently own a 25-year maturity Government of Canada bond with a face value of $1000 that was issued Oct 15, 2015 (ie. 5 years ago) with a 6% coupon paid semi-annually. The current price of the bond is $1075. a) What is the current YTM of this Government of Canada bond? Assume semi-annual compounding You also own a Corporate bond that will mature in 20 years. It also pays a semi-annual coupon...
25-year bond has a $1,000 face value, a 10% yield to maturity, and an 8% annual coupon rate, paid semi-annually. What is the market value of the bond? Suppose a bond with a 10% coupon rate and semiannual coupons, has a face value of $1000, 20 years to maturity and is selling for $1197.93. What’s the YTM?
1. You own a 20-year, $1000 face value bond paying 8% coupon annually. If market price of the bond is 1000, what should be the Yield to Maturity of the bond? You also own a 20-year, $1000 face value bond paying 8% coupon annually. What should be the market price of the bond so that its Yield to Maturity is exactly 10%?
3. You own a 30-year, $1000 face value bond paying 9% coupon annually. If market price of the bond is 1500, what should be the Yield to Maturity of the bond? You also own a 30-year, $1000 face value bond paying 9% coupon annually. What should be the market price of the bond so that its Yield to Maturity is exactly 7%?
2. You own a 20-year, $1000 face value bond paying 8% coupon annually. What should be the market price of the bond so that its Yield to Maturity is exactly 10%? You also own a 30-year, $1000 face value bond paying 9% coupon annually. If your required rate of return is 9%, what should be the value of the bond?
You have purchased a bond with 6 year maturity, 6% coupon rate, $1000 face value, and semi-annual payments for $975.48. Two years later, when the YTM=7.2%, you sell the bond. What was your average annual realized yield on the bond, if you were able to reinvest coupons at 6.5%? [Provide your answer in percent rounded to two decimals, omitting the % sign.]
Q4 - Bond Valuation (25 min) Value the following bonds 20-year bond with a face value of $10,000 with an annual coupon of 5% and market rate (yield to maturity or YTM) of 6.5% 10-year bond with a coupon of 8% (split into quarterly payments), face value of $5000 and YTM of 7% (annually) 5-year bond with a face value of $4,000, with semi-annual coupon payments, with a coupon rate equal to YTM.
1) Consider a 10-year bond trading at $1150 today. The bond has a face value of $1,000, and has a coupon rate of 8%. Coupons are paid semiannually, and the next coupon payment is exactly 6 months from now. What is the bond's yield to maturity? 2)A coupon-paying bond is trading below par. How does the bond's YTM compare to its coupon rate? a. Need more info b. YTM = Coupon Rate c. YTM > Coupon Rate d. YTM <...
Corp-X issued corporate bonds one year ago at par with a face value of $1000, an annual coupon rate of 6%(paid semi annually), and a 20 years to maturity. At the moment, bonds of equivalent risk and maturity to these Corp-X bonds are being issued at par with a coupon rate of 5.5% per year(paid semi annually) 1. At the time that Corp-X bonds were issued, what was the Yield to Maturity of the bonds? And What is the current...
You have purchased a bond with 23 year maturity, 2% coupon rate, $1000 face value, and semi-annual payments for $834.72 Two years later, when the YTM=2.5%, you sell the bond. What was your average annual realized yield on the bond, if you were able to reinvest coupons at 3%? [Provide your answer in percent rounded to two decimals, omitting the % sign.]