In: Finance
#1. An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 9% annual coupon. Bond L matures in 10 years, while Bond S matures in 1 year.
5% | 7% | 10% | |
Bond L | $ | $ | $ |
Bond S | $ | $ | $ |
#2. An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 9.1%. Bond C pays a 10.5% annual coupon, while Bond Z is a zero-coupon bond.
Years to Maturity | Price of Bond C | Price of Bond Z |
4 | $ Answer | $ Answer |
3 | $ Answer | $ Answer |
2 | $ Answer | $ Answer |
1 | $ Answer | $ Answer |
0 | $ Answer | $ Answer |
#3. Six years ago the Templeton Company issued 15-year bonds with a 14% annual coupon rate at their $1,000 par value. The bonds had a 9% call premium, with 5 years of call protection. Today Templeton called the bonds. Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.
_______%
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