* Question 1 2 out of 2 points | | | Which of the following statements is CORRECT?Answer | | | | | Selected Answer: | If CF0 is positive and all the other CFs are negative‚ then you can still solve for I. | Correct Answer: | If CF0 is positive and all the other CFs are negative‚ then you can still solve for I. | | | | | * Question 2 2 out of 2 points | | | You plan to analyze the value of a potential investment by calculating the sum of the present values
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bond features your company should consider and what coupon rate the issue will likely have. Although your Bosses are aware of the bond features‚ they are not sure about the costs and benefits of some features especially how they will affect the coupon rate of the bond issues. This is more so that your firm is not a publicly traded company. You have been asked to prepare a memo on the effect of each of the following bond features on the coupon rate of the bond. It is expected that you will emphasis
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khk.l;/;’;ldfkm’sd;gAV~Bond Math 1.- Dirk Schwartz‚ an analyst for TwoX Asset Management L.P.‚ is considering investing $1 million in one of three risk-free bonds. All are single-coupon bonds that make a single payment at maturity. Although interest accrues daily‚ no cash is paid until the bonds mature. Bond A matures in two years and promises an annual interest rate of 9%. Compounding occurs annually; accrued interest is added to the bond’s principal at the end of each year. Bond B has a maturity
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Features of the bond Face Value l Coupon Rate Periodicity of coupon payments Maturity Redemption Value Fixed and Floating Rate Bonds Indexed Bonds Callable & Puttable Bonds C ll bl & P tt bl B d Zero Coupon and Deep Discount Bonds Convertible Bonds CHAPTER 6 Types of Bonds Types of Bonds Cash Flow of the bond VALUATION & MANAGEMENT OF BONDS 3 CONTENTS Pricing of bond/Yield on the bond Deep Discount/Zero Coupon Bonds & STRIPS Term Structure of Interest Rates
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Unless explicitly specified‚ bond pays coupon interest semi-annually. 1. (a) Provide the list of currently outstanding Government Bonds in Hong Kong. Information should include at least the maturity date‚ the coupon rate‚ and the size of each bond. (b) Describe the most recent Hong Kong Government Bond issuance under the Institutional Bond Issuance Programme. 2. The portfolio manager of a tax-exempt fund is considering investing $500‚000 in a zero-coupon debt instrument that pays an annual interest
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of Rs. 100/- perpetual bond is currently selling for RS. 95/-. The coupon rate of interest is 13.5%. The approximate discount rate is 15%. The value of the bond and the YTM is: (a) Rs. 90/- and 14.2% Value is (13.5*15%=90) and YTM is ((13.5/95)*100=14.21%) (b) Rs. 100/- and 13.5% (c) Rs. 90 and 15% (d) Rs. 90/- and 13.5% 902. In 2001‚ Meridian Ltd. has issued bonds of Rs. 10‚000/-each due in 2011 with a 14% per annum coupon rate payable at the end of each year during the life of the bond
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reinvested at the coupon rate of return. (b) based on the assumption that any payments received are reinvested at the current yield. (c) below the coupon rate when the bond sells at a discount‚ and above the coupon rate when the bond sells at a premium. (d) none of the above. B. (2 marks) In which one of the following cases is the bond selling at a premium? (a) Coupon rate is greater than current yield which is greater than yield to maturity. (b) Coupon rate‚ current yield
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you might have been planning for a long time. A sincere approach you will need put in is one with discount coupons that gets
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enrolled in an Investments class has picked a project on bond price theorems. The two main theorems that she decided to illustrate dealt with coupon rate and term-to-maturity and how these factors influence the price. Thus she included 2 bonds with the same rating and term with a different coupon rate‚ as well as two bonds with the same rating and coupon rate with different terms. She thought that if the bond markets were efficient‚ bonds with similar characteristics would be priced so that there
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to calculate the fair price of a Treasury issue with a 3.5% coupon maturing on 1/15/15. Answer: The fair price of a Treasury bond issue with a 3.5% coupon bond maturing on 15 January 2015: By discount factor‚ From part (a)‚ the d(0.5) = 0.99499‚ part (b)‚ the d(1.0) = 0.98297‚ part (c)‚ the d(1.5) = 0.95998 and part (d)‚ the d(2.0) = 0.92998 Therefore‚ the fair price of a Treasury Bond issue with a 3.5% coupon bond maturing on 15 January 2015 is $99.77 3. If the market
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