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##### 1) A firm's bonds have maturity of 10 years with a...

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1) A firm's bonds have maturity of 10 years with a $1000 face value, an 8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells at a price of $1,100. What is the yield to call (YTC)? 2) The 11.7 percent, $1,000 face value bonds of Tim McKnight, Inc., are currently selling at $915.12. What is the current yield? 3) ABC's Inc.'s bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)? 4) ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 16 years; Coupon rate: 5%; Assume annual coupon payments. Calculate the price of this bond if the YTM is 5.96% 5) ABC Inc., has $1,000 face value bonds outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59 percent of par value. Assume semi-annual payments. What is the yield to maturity? 6) ABC wants to issue 18-year, zero coupon bonds that yield 11.35 percent. What price should they charge for these bonds if they have a par value of $1,000? That is, solve for PV. Assume annual compounding. Hint: zero coupon bonds means PMT = 0 7) Stealers Wheel Software has 9.62% coupon bonds on the market with nine years to maturity. The bonds make semi-annual payments and currently sell for 107.46% of par. What is the current yield? 8) ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds currently sell for 97% of par value, what is the YTM? 9) BCD?s $1,000 par value bonds currently sell for $798.40. The coupon rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is the yield to maturity? 10) ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 9 years; Coupon rate: 7%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 8.84% 11) The 12.58 percent coupon bonds of the Peterson Co. are selling for $822.17. The bonds mature in 5 years and pay interest semi-annually. These bonds have current yield of _____ percent. 12) ABC has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 17 years; Coupon rate: 6%; Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 4.17% 13) Assume that you wish to purchase a 18-year bond that has a maturity value of $1,000 and a coupon interest rate of 5%, paid semiannually. If you require a 4.42% rate of return on this investment (YTM), what is the maximum price that you should be willing to pay for this bond? That is, solve for PV. 14) You paid $852 for a corporate bond that has a 10.85% coupon rate. What is the current yield? Hint: if nothing is mentioned, then assume par value = $1,000

Paper#5309 | Written in 18-Jul-2015

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