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Homework answers / question archive / Question 1 15 / 15 pts In April 2016 Treasury 4 3/4s of 2040 offered a semiannually compounded yield to maturity of 2
Question 1
15 / 15 pts
In April 2016 Treasury 4 3/4s of 2040 offered a semiannually compounded yield to maturity of 2.80%. Recognizing that coupons are paid semiannually, calculate the bond's price. Assume face value is $1,000. (round to nearest whole dollar)
15 / 15 pts
The interest rate is 9% and the expected annual inflation rate is 4.5%.What is the expected real interest rate? (round to nearest 1 tenth of a percent)
15 / 15 pts
A bond's credit rating provides a guide to its price. Assume Aaa bonds yield 3.3% and Baa bonds yield 4.2%. Assume you want to buy a 6% three-year bond with annual coupons and a face value of $1,000. How much should you pay for the bond if it is rated as Aaa? (round to nearest whole dollar)
15 / 15 pts
A mortgage requires you to pay $2,000 at the end of each month for the next 30 years. The annual interest rate is 6%. What is the balance of the mortage at the end of 5 years? (round to nearest whole dollar)
15 / 15 pts
You are quoted an interest rate of 6.25% on an investment of $5 million. What is the value of your investment after five years if interest is compounded monthly?
(answer in millions. round to 1 decimal)
12.5 / 12.5 pts
What is the yield to maturity of a bond priced at 98% of par value, maturing in 5 years with a 5% annual coupon? (round answer to nearest 2 decimals)
12.5 / 12.5 pts
What is the yield to maturity of a bond priced at 103% of par value, maturing in 6 years with a 5% annual coupon, paid semi-annually? (round to 2 decimals)
Question 1
15 / 15 pts
In April 2016 Treasury 4 3/4s of 2040 offered a semiannually compounded yield to maturity of 2.80%. Recognizing that coupons are paid semiannually, calculate the bond's price. Assume face value is $1,000. (round to nearest whole dollar)
Correct!
Correct Answers
1,339 (with margin: 1)
Correct
15 / 15 pts
The interest rate is 9% and the expected annual inflation rate is 4.5%.What is the expected real interest rate? (round to nearest 1 tenth of a percent)
Correct!
Correct Answers
4.3 (with margin: 0.1)
Correct
15 / 15 pts
A bond's credit rating provides a guide to its price. Assume Aaa bonds yield 3.3% and Baa bonds yield 4.2%. Assume you want to buy a 6% three-year bond with annual coupons and a face value of $1,000. How much should you pay for the bond if it is rated as Aaa? (round to nearest whole dollar)
Correct!
Correct Answers
1,076 (with margin: 1)
Correct
15 / 15 pts
A mortgage requires you to pay $2,000 at the end of each month for the next 30 years. The annual interest rate is 6%. What is the balance of the mortage at the end of 5 years? (round to nearest whole dollar)
Correct!
Correct Answers
310,414 (with margin: 1)
Correct.
15 / 15 pts
You are quoted an interest rate of 6.25% on an investment of $5 million. What is the value of your investment after five years if interest is compounded monthly?
(answer in millions. round to 1 decimal)
Correct!
Correct Answers
6.8 (with margin: 0.1)
Correct.
12.5 / 12.5 pts
What is the yield to maturity of a bond priced at 98% of par value, maturing in 5 years with a 5% annual coupon? (round answer to nearest 2 decimals)
Correct!
Correct Answers
5.47 (with margin: 0.1)
Correct
12.5 / 12.5 pts
What is the yield to maturity of a bond priced at 103% of par value, maturing in 6 years with a 5% annual coupon, paid semi-annually? (round to 2 decimals)
Correct!
Correct Answers
4.43 (with margin: 0.1)
Correct
