Problem 6.01 – Bonds & YTM, Selling at Par
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition and 11th Edition
Is the YTM on a bond the same as the required return? Is the YTM the same as the coupon rate?
Is the YTM on a bond the same as the required return? Is the YTM the same as the coupon rate?
Given a table of U.S. Treasury security rates and are asked to interpret the yield curve and explain what the graph means.
Given the t-bills and the inflation, liquidity, maturity, and default risk premiums… find the real risk-free rate of return?
What is the effect on the value of a bond if interest rates increase after its issuance? What if rates decrease?
Given the real risk-free rate, expected inflation, and inflation for the next two years… find the yield on 2-year and 3-year treasury securities?
What is the price of a German bond in euros with a specified par value, coupon rate, maturity, and YTM, given that the coupon payments are made annually? Solve for the price of a German bond in euros given the par value, years to maturity, coupon rate, and YTM.
Given the treasury bond, corporate bond, and liquidity premium… find the default risk premium on the corporate bond?
Given what the Japanese bond sells for, its par value in Yen, a coupon rate, and when it matures, determine the yield to maturity of the Japanese bond.
What is the coupon rate of a bond with a specified par value, selling price, yield, and years to maturity, given that it makes periodic payments? Calculate the coupon rate on the bonds.
Given the real risk-free rate, inflation over 2 years, and the 2-year treasury… find the maturity risk premium for the 2-year security?