A one-year bond with face value €100 and annual coupon 3% was bought for €98 and is redeemed today.

1. A.Calculate the holding-period return.

A six-year government bond has face value €1,000, annual coupon 5% and yield 3%. Sell it one year later immediately after receiving a coupon. Consider yields of 3% and 2% at sale.

1. A.Calculate both holding-period returns.

Noiz has face value 100, five years to maturity and a 5% annual coupon. It is purchased at par and sold one year later, immediately after the coupon, for 98.50. Xilent has face value 100, a 4% annual coupon and six years remaining; initially it has the same yield as Noiz. Xilent is sold after one year, after the coupon, for 90.

1. A.Find the initial and subsequent yields of Noiz.
2. B.Calculate the one-year holding-period return on Noiz.
3. C.Price Xilent and explain its discount.
4. D.Calculate the holding-period return on Xilent.

Bond A has face 1,000, annual coupon 8%, three years to maturity and price 938. Bond B has the same face, coupon and yield but five years to maturity. A is sold one year later, after its coupon, for 910. A new five-year zero-coupon C has the same face and initial yield.

1. A.Find A’s YTM and price B.
2. B.Which coupon bond is more sensitive to an unexpected yield rise?
3. C.Calculate A’s holding return and C’s issue price.

1. A.A fixed-coupon bond was bought at par one year ago. Its required yield has fallen by 0.5 percentage points, and it is sold after receiving the annual coupon. How does the realised return compare with the coupon rate?

Bond D was bought one year ago for 130, has three years remaining, face 100 and annual coupon 12%; its current YTM equals A’s. Separately, a thirty-year government bond with face 100 pays 5% annually and yields 2%.

1. A.Complete A and B.
2. B.Price D and calculate its one-year holding return.
3. C.Price the thirty-year bond.