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##### ind the value of \$X that will also yield j1 = 7% on a \$1,000 bond from company C

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QI Company C also issues bonds with face value of \$1,000 which pay interest of \$X annually. They are redeemable at 105 in 8 years. Find the value of \$X that will also yield j1 = 7% on a \$1,000 bond from company C, if such a bond costs \$960.;Q2;A bond with face value of \$1,000 issued by company A has half-yearly interest payments at j2 = 7.2%. It is redeemable at par in 14 years. Find the price of a \$1,000 bond from company A to yield j1 = 7%.;(As the interest payments are half-yearly you will need to use the equivalent j2/2 value for the half-yearly yield when calculating the price. Use the unrounded yield (store it in the memory of your calculator) or your answer will probably be marked as incorrect.);Q3;Mr Morgan buys a bond with face value of \$1,000 that pays bond interest at j2 = 6.6% and is redeemable at par in 20 years. The price he pays will give him a yield of j2 = 7.8% if he holds the bond to maturity. After 3 years, Mr Morgan sells this bond to Ms Grenfell who wants a yield to maturity of j2 = 5.4% on her investment.;Use the APPROXIMATE formula to calculate the yield, j2, earned by Mr Morgan on his investment (as a %, 2 decimal places).;(The C term in the formula will be the sale price in the previous question and the n term will be the time between purchase by Mr Morgan and sale by Mr Morgan.);Q4;Mr Morgan buys a bond with face value of \$1,000 that pays bond interest at j2 = 6.6% and is redeemable at par in 20 years. The price he pays will give him a yield of j2 = 7.8% if he holds the bond to maturity. After 3 years, Mr Morgan sells this bond to Ms Grenfell who wants a yield to maturity of j2 = 5.4% on her investment.;What price did Ms Grenfell pay?;(She is assumed to hold the bond for (20 - 3) years to maturity.);Q5;Mr Morgan buys a bond with face value of \$1,000 that pays bond interest at j2 = 6.6% and is redeemable at par in 20 years. The price he pays will give him a yield of j2 = 7.8% if he holds the bond to maturity. After 3 years, Mr Morgan sells this bond to Ms Grenfell who wants a yield to maturity of j2 = 5.4% on her investment.;What price did Mr Morgan pay?;(The information about Ms Grenfell is not relevant to this question but will be required in the next question.);Q6;A bond with face value \$2,000, paying interest at j2 = 11%, is purchased 12 years before redemption for \$1934. If redemption is at par, use LINEAR INTERPOLATION to calculate the yield, j2, to maturity (as a %, 2 decimal places).;(The required answer is the j2 value and not the half-yearly yield. For the half-yearly yield use starting points of 5.5% and 6%.);Q7;A bond with face value \$2,000, paying interest at j2 = 11%, is purchased 12 years before redemption for \$1951. If redemption is at par, use the APPROXIMATE formula to calculate the yield, j2, to maturity (as a %, 2 decimal places).;(The required answer is the j2 value and not the half-yearly yield.;When a question says to use the approximate formula, linear interpolation is not required.);please show all steps

Paper#20897 | Written in 18-Jul-2015

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