Question Details

[solution] » I need help with this assignment, im not sure of the equations to use. Additional Requirements Min..

Brief item decscription

Step-by-step solution file


Item details:

I need help with this assignment, im not sure of the equations to use. Additional Requirements Min..
More:I need help with this assignment, im not sure of the equations to use. Additional Requirements Min Pages: 1 Max Pages: 2 Level of Detail: Show all work Document Preview: MOUNT SAINT VINCENT UNIVERSITY BUSI 3361(02) Winter 2014 Assignment #2 Due on Thursday, February 13, 2014 at 3:00p.m. (Due at the start of class….late assignments will not be accepted) Total Value 60 Marks Assume that the current yield curve shows that current market rates for bonds that pay semi annual coupons are as follows: the 6 month rate is 1%, the one year rate is 1.1%, and the one and a half year rate is 1.3%. These bonds all have an interest coupon that pays interest semi annually. What is the price of a $1000 par, 4% coupon maturing in one and half years (the next coupon is exactly 6 months from now)? Hint: the 6 month rate should be used to discount the first coupon which is paid in 6 months, the one year rate should be used to discount the second coupon which is paid in one year and the one and one half year rate should be used to discount the coupon paid in one and one half year.  (6 Marks) Suppose a 10 year $1000 bond with an 8% coupon rate and semi annual coupons is trading for a price of $1034.74. What is the bond’s yield to maturity (expressed as an APR with semi annual compounding)? (4 Marks) If the bond’s yield to maturity changes to 9% APR, what will the bond’s price be? (4 Marks) The prices of several bonds with face values of $1000 are summarized below: Bond A B C D Price $972.50 $1040.75 $1150.00 $1000.00 For each bond, state whether it trades at a discount, at par, or at a premium. (4 Marks) You have purchased a 10% coupon bond for $1040. What will happen to the bond’s price if market interest rates rise. (2 Marks) Suppose a 7 year $1000 bond with a 8% coupon rate and semi annual coupon, is trading with a yield to maturity of 6.75%. Is this bond currently trading at a discount, at par, or at a premium? Explain. (2 Marks) If the yield to maturity of the bond rises to 7% (APR with semi annual compounding), what price will the bond trade for? (4 Marks) Anle Corporation has a current stock price of $20 and is expected...

 







About this question:
STATUS
Answered
QUALITY
Approved
ANSWER RATING

This question was answered on: Feb 21, 2020

PRICE: $24

Solution~000189745512.zip (18.37 KB)

Buy this answer for only: $24

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card. All your purchases are securely protected by PayPal.
SiteLock

Need a similar solution fast, written anew from scratch? Place your own custom order

We have top-notch tutors who can help you with your essay at a reasonable cost and then you can simply use that essay as a template to build your own arguments. This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student. New solution orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

Order Now