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Bond Valuation Problems



Bond Valuation Problems 1 2. Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): a. what is the maturity of the bond (in years) ? b. what is the coupon rate (in percent)? c. what is the face value? 4. suppose the current zero-coupon yield curve for risk-free bonds is as follows; a. what is the price per $100 face value of a two year, zero-coupon, risk-free bond? b. what is the price per $100 face value of a four-year, zero-coupon, risk free bond? c. what is the risk free interest rate for a five-year maturity? 9. suppose a seven years,$1000 bond with an 8% coupon rate and semi annual coupons is trading with a yield to maturity of 6.75%. a. is this bond currently trading at a discount, at par, or at a premium ? explain. b. if the yield to maturity of the bond rises to 7.00%(APR with semiannual compounding), what price will the bond trade for? 19 . Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1000. a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain. b. What is the yield to maturity on this bond? c. If the yield to maturity on this bond increased to 5.2%, what would the new price be? The following table Summarize the yield to maturity on several one year, zero-coupon securities What is the price of a one-year, zero-coupon corporate bond with a AAA rating? What is the credit spread on a AAA-rated corporate bonds? What is the credit spread on B rated corporate bonds? How does the credit spread change with the bond rating? Why? Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help


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