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What is the yield to maturity (YTM) of a zero coupon bond with a face value of $1,000, current price of $940 and maturity of 9 years? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis.

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Reid Wolff
Reid WolffLv2
30 Sep 2019
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Related questions

Bond P is a premium bond with a 12 percent coupon. Bond D is a 6 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have five years to maturity. Assume these bonds have a face value of $1,000.

C. What is the current yield of bond P and bond D if interest rates suddenly shifted and the new YTM is 7%?

D. What are the prices of each bond in 4 years assuming the YTM remains 9%? How do the prices of each bond change over time? What direction do the prices move for discount and premium bonds?

Today is a day in May 2525 and a bond with an coupon rate of 8.0% just yesterday paid a coupon. The bond matures in November 2540 and its quoted bond price is 118.03 percent of par (semiannual compounding). Find the yield to maturity (YTM) and current yield.

Select one:

a. The current yield is 5.86% and the YTM is 6.18%

b. The current yield is 3.39% and the YTM is 3.09%

c. The current yield is 6.78% and the YTM is 3.09%

d. The current yield is 6.78% and the YTM is 6.18%

e. The current yield is 3.39% and the YTM is 6.18%

4. You expect interest rates to fall in the eurozone. The rest of the market thinks that they will remain unchanged over the coming year. In each question, choose the bond that will provide the higher capital gain due to the longer duration if you are correct. Explain.

(1) A A-rated bond with coupon rate 10% and time to maturity 30 years.

(2) A B-rated bond with coupon rate 10% and time to maturity 30 years.

.

(1) A 30-year A-rated bond with coupon rate 10%, callable at 110 with YTM = 5%.

(2) A 30-year A-rated bond with coupon rate 5%, callable at 110 with YTM = 5%.

.

(1) A 5% coupon noncallable T-bond with maturity 10 years and YTM = 6%.

(2) A 5% coupon noncallable T-bond with maturity 30 years and YTM = 6%.

.

(1) A 5% coupon noncallable T-bond with maturity 10 years and YTM = 5%.

(2) A 5% coupon noncallable T-bond with maturity 10 years and YTM = 7%.

.

(1) A zero-coupon bond with maturity 30 years and YTM = 8%.

(2) A 10% coupon noncallable T-bond with maturity 30 years and YTM = 8%

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