## What is the Amount of the Annual Coupon Interest Rate

What is the Amount of the Annual Coupon Interest Rate for \$5 Only (Instant Download)

QUESTION 2: A) What is the amount of the annual coupon interest rate for a bond that has five years until maturity, sells for \$995.00 and has a yield to maturity of 9.129%? (Use 3-decimal places) (5 marks)

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## Effects of Default Risk

Question 12 (1 pts) This question illustrates the effects of default risk on a bond’s yield to maturity. BBB Corp has a risky bond with face value of 1,000, annual coupon rate of 10%, maturity of 5 years, and an opportunity cost of capital of 11%. If bondholders exepect that there is only a 50% chance that they will receive each of the last 3 payments, what is this bonds yield-to-maturity? Enter your answer as a perecent without the “%”; round your final answer to two decimals.

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## Bond Issued by Kraft Heinz Foods Co

Below is the listing of a bond issued by KRAFT HEINZ FOODS CO (KHC). Below the detail of the bond is the information on a recent sale of part of the bond issue. • Explain what the price of \$110.534 on a \$100 par value bond means in this purchase. Explain how the yield to maturity of 3.270% is calculated • Contrast that with the calculation of the current yield of 4.184%. • Explain why it matters to know if the bond pays interest monthly, semi-annually or annually. This bond does not mature for almost 9 years. Explain the concept of interest rate risk in context with this bond for both the issuer and the investor. Rating Issuer -CUSIP Baa3 – Moody’s KRAFT HEINZ BBB FOODS CÓ (KHC) Coupon 4.625% Maturity 01/30/2029 ofesorice \$110534 Price \$110.534 Yield to Maturity 3.270% Current Yield Dated 06/15/2018 Minimun Size 10K Coupon Pd Semi-Annual Callable No 4.184%

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## Question on Yield to Maturity

The yield to maturity on one-year zero coupon bonds is 5.64%. The yield to maturity on two-year zero coupon bonds is 7.42%.

a. What is the forward rate of interest for the second year? (Round your answer to 2 decimal places.)

Forward rate            %

b. According to the expectations hypothesis, what is the expected value of the one-year interest rate for next year? (Round your answer to 2 decimal places.)

Expected value            %