HomeworkLib
Question

Question code 65 56 70 Stockholms universitet .A zero-coupon bond with maturity in two years and face value 1000 SEK has a price equal to 990 SEK. What is its yield-to-maturity? A. 1.01% B. 2.02% -: r v C. 0.50% D. 3.00% E. It cannot be computed FV (I+YTM)M

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

P = FV / ( 1 + YTM)n

P / FV = 1 / ( 1 + YTM)n

990 / 1000 = 1 / ( 1 + YTM)2

0.99 = 1 / ( 1 + YTM)2

( 1 + YTM)2 = 1 / 0.99

( 1 + YTM)2 = 1.010101

1 + YTM = 1.0050

YTM = 0.0050 or 0.50%

0 0
Add a comment
Know the answer?
Add Answer to:
Question code 65 56 70 Stockholms universitet .A zero-coupon bond with maturity in two years and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Compute the yield to maturity for a zero coupon bond with a maturity of 13 years...

    Compute the yield to maturity for a zero coupon bond with a maturity of 13 years and a face value of $1000. The bond is selling for $594.06. (Assume annual discounting.) (Round to 100th of a percent and enter as a percentage, e.g. 12.34% as 12.34)

  • Zero-coupon bonds: a. A ten-year, zero coupon bond trades at a Yield-to-Maturity (YTM) of 3.5%. Assume...

    Zero-coupon bonds: a. A ten-year, zero coupon bond trades at a Yield-to-Maturity (YTM) of 3.5%. Assume you buy $1000 worth of the bond today. How much will it be worth 10 years from now at maturity? b. A 5-year, zero coupon bond trades at a Yield-to-Maturity (YTM) of 2.5%. Assume you buy $1000 worth of the bond today. How much will it be worth 5 years from now at maturity? C. Assume you invest $1,131.41 today and receive $1,410.60 five...

  • Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If...

    Consider a zero-coupon bond with a $1000 face value and 10 years left until maturity. If the YTM of this bond is 10.2%, then the price of this bond is closest to ________.

  • What is the yield to maturity (YTM) of a zero coupon bond with a face value...

    What is the yield to maturity (YTM) of a zero coupon bond with a face value of $1,000, current price of $920 and maturity of 3.5 years? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis. (Allow two decimals in the percentage but do not enter the % sign.)

  • The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 4.99% 5.79%...

    The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM 4.99% 5.79% 5.99% 6.03% What is the price per $100 face value of a four-year, zero-coupon, risk-free bond? The price per $100 face value of the four-year, zero-coupon, risk-free bond is $ . (Round to the nearest cent.) The current zero-coupon yield curve for risk-free bonds is as follows: Maturity (years) YTM - 5.54% 4.99% 5.54% 5.97% 6.06% What is the risk-free interest rate for a...

  • A zero coupon bond issued by Corporation A has a residual maturity of 2 years, an...

    A zero coupon bond issued by Corporation A has a residual maturity of 2 years, an expected return in continuous compounding equal to 3.12% and a face value of 1,000 USD. Knowing that the corporate bond is risky (hence the company can default) but bears no systematic risk, what is the risk-free rate in discrete annual compounding for a two-year investment? (a) 3.17% (b) 3.12% (c) 3.00% (d) Since the bond is risky it cannot be determined. The correct answer...

  • Consider a zero−coupon bond with a​ $1,000 face value and 20 years to maturity. The price...

    Consider a zero−coupon bond with a​ $1,000 face value and 20 years to maturity. The price this bond will trade for if the YTM is​ 6% is closest​ to: A.​$312 B.​$335 C.​$306 D.​$215

  • Consider two bonds. The first is a 6% coupon bond with six years to maturity, and...

    Consider two bonds. The first is a 6% coupon bond with six years to maturity, and a yield to maturity of 4.5% annual rate, compounded semi-annually. The second bond is a 2% coupon bond with six years to maturity and a yield to maturity of 5.0%, annual rate, compounded semi-annually. 1. Calculate the current price per $100 of face value of each bond. (You may use financial calculator to do question 1 and 2, I'm just unsure how to use...

  • #22. Consider a​ zero-coupon bond with $ 100 face value and 15 years to maturity. The...

    #22. Consider a​ zero-coupon bond with $ 100 face value and 15 years to maturity. The price will this bond trade if the YTM is 6.1​% is closest​ to: A. $ 41.14 B. $ 49.37 C. $ 57.6 D. $ 65.82

  • Question Find the equilavent years to maturity ofa zero-coupon bond to one that has a coupon...

    Question Find the equilavent years to maturity ofa zero-coupon bond to one that has a coupon rate of 8.60%, 5 years to maturity and a yield to maturity of 9.20% Find the equilavent years to maturity of a zero-coupon bond to one that has a coupon rate of 660% (annual coupons) 10 years to maturity, and a yield to maturity 3 of 6.00%. Find the approximate percentage change in the price of a bond due to a 10 basis point...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT