I have these 4 questions for my Finacial class and dont know how to solve. Would really appreciate itf someone could help me solve them.
1. DTO Inc., has 8% annual coupon bonds on the market that has 10 years left to maturity. If the YTM on these bonds is 6%, what is the current bond price?
2. Both Bond Sam and Bond Dave are 10% annual coupon bonds and are priced at par. Bonds Sam has 2 years to maturity. Bonds Dave have 15 years to maturity. What is the percentage change in bond price of both bonds if the yield to maturity suddenly increases by 2%? (The key word here is both bonds are selling at par value. That means the yield to maturity = ?)
3. 3.Both Bond Sam and Bond Dave are 10% semiannual coupon bonds and are priced at par. Bonds Sam has 2 years to maturity. Bonds Dave have 15 years to maturity. What is the percentage change in bond price of both bonds if the yield to maturity suddenly increases by 2%? (Please note that I emphasize the word semiannual coupon bonds. What is the different between this question and question 2?)
4. Raines Umbrella Crop. Issued 12-year bonds 2 years ago at a coupon rate of 8.6%. The bonds make semiannual coupon payments. If these bonds currently sell for $970, what is YTM of the bond? What is the effective annual yield (EAY)?
1. DTO Inc., has 8% annual coupon bonds on the market that has 10 years left to maturity. If the YTM on these bonds is 6%, what is the current bond price?
2. Both Bond Sam and Bond Dave are 10% annual coupon bonds and are priced at par. Bonds Sam has 2 years to maturity. Bonds Dave have 15 years to maturity. What is the percentage change in bond price of both bonds if the yield to maturity suddenly increases by 2%? (The key word here is both bonds are selling at par value. That means the yield to maturity = ?)
3. 3.Both Bond Sam and Bond Dave are 10% semiannual coupon bonds and are priced at par. Bonds Sam has 2 years to maturity. Bonds Dave have 15 years to maturity. What is the percentage change in bond price of both bonds if the yield to maturity suddenly increases by 2%? (Please note that I emphasize the word semiannual coupon bonds. What is the different between this question and question 2?)
4. Raines Umbrella Crop. Issued 12-year bonds 2 years ago at a coupon rate of 8.6%. The bonds make semiannual coupon payments. If these bonds currently sell for $970, what is YTM of the bond? What is the effective annual yield (EAY)?