Question

1. Oaktree Company has a $1000 face value, 9% coupon bond making annual coupon payments with 10 years to maturity.  What is the dollar amount of the annual coupon payment?

1. You are considering investing in a $1000 face value 10% semi-annual coupon bond with 8 years left to maturity. Similar bonds are yielding 9.5% in the market, so the current price of this bond is _______, and if market interest rates increase to 11% the selling price of the bond would _____________?

   		$957.69; increase to $1,017.50
   		$957.69; decrease to $860.50
   		$1,027.59; decrease to $947.69
   		$1,027.59; increase to $1,107.69

1. You are considering investing in a $1000 face value 12% semi-annual coupon bond with 4 years left to maturity. Similar bonds are yielding 11% in the market, so the current price of this bond is _______, and if market interest rates drop to 10% the selling price of the bond would _____________?

   		$880.50; increase to $924.50
   		$936.67; decrease to $915.50
   		$1,031.67; decrease to $1,016.50
   		$1,031.67; increase to $1,064.63

You are considering investing in a $1000 face value 9% semi-annual coupon bond with 10 years left to maturity. Similar bonds are yielding 10% in the market, so the current price of this bond is _______, and if market interest rates increase to 11% the selling price of the bond would _____________?

1. 		$937.69; increase to $974.50
   		$937.69; decrease to $880.50
   		$1,062.50; increase to $1,087.69
   		$1,062.50; decrease to $1,023.50

1. You are considering investing in a $1000 face value 8% semi-annual coupon bond with 3 years left to maturity. Similar bonds are yielding 9.5% in the market, so the current price of this bond is _______, and if market interest rates drop to 8.25% the selling price of the bond would _____________?

   		$947.73; increase to $974.67
   		$947.73; decrease to $924.67
   		$961.63; increase to $993.47
   		$961.63; decrease to $933.47

Answer 1

1: Annual coupon = $90

2: $1,027.59; decrease to $947.69

3: $1,031.67; increase to $1,064.63

4: $937.69; decrease to $880.50

5: $961.63; increase to $993.47

Q No
1	Annual coupon=rate*FV	90
2	Current price	$1,027.58
	New price	$947.69
3	Current price	$1,031.67
	New price	$1,064.63
4	Current price	$937.69
	New price	$880.50
5	Current price	$961.63
	New price	$993.47