Question

BOND VALUATION PROBLEMS

I.DETERMINE BOND VALUES BASED ON ANNUAL, SEMI-ANNUAL,QUARTERLY AND MONTHLY INTEREST PAYMENTS FOR THE FOLLOWING:

1.YTM=10%, 5.5 YEARS TO MATURITY, WITH COUPON RATE OF 14.5%

2.IRR=12.75%, 23 YEARS 3 MONTHS TO MATURITY, COUPON=8.94%

3.CURRENT MARKET RATE=4.5%, 35 MONTHS TO MATURITY, ANNUAL INTEREST INCOME OF $175

4.REQUIRED RATE=20.35%, 19.333 YEARS TO MATURITY, CURRENT YIELD EQUAL TO 20% WHEN PRICE=$900

5.YTM=15%, 9 YEARS TO MATURITY, CURRENT YIELD OF 20% WHEN PRICE=$750

BOND YIELD PROBLEMS

II.DETERMINE ALL POSSIBLE AND APPROPRIATE RATES OF RETURN BASED ON ANNUAL, SEMI-ANNUAL, QUARTERLY AND MONTHLY INTEREST PAYMENTS.

1.PRICE=$897.50, MATURITY=12 YEARS 180 DAYS, CURRENT YIELD=10% BASED ON CURRENT PRICE

2.PRICE=92.5% OF PAR, 5.5 YEARS TO MATURITY, COUPON OF 8%

3.PRICE=$979.50, CURRENT YIELD=11.23%

4.PRICE=$1275.75, COUPON YIELD=10.9%

5.PRICE=$2057, ANNUAL INTEREST OF $145.25, 7.5 YEARS TO maturity

Answer 1