Question

16. A bond with 5 years to maturity is selling for $1,000 and has a yield to maturity of 4.50%. If this bond pays its coupon payments semi-annually and par value is $1,000, what is the bond's annual coupon rate?

A. 4.45%

B. 4.50%
C. 4.89%
D. 4.95%
E. 5.12%

19. Acme Inc. just issued a bond with a $1,000 face value and a coupon rate of 7%. If the bond has a life of 30 years, pays semi-annual coupons, and the yield to maturity is 9%, what will the Acme, Inc. bond sell for?
A. $434.95
B. $790.45
C. $793.62
D. $794.53
E. $894.56

20. What is the price of a five-year bond with a $1,000 face value and a 5.0% annual coupon rate that currently yields 7.0%? The bond pays annual coupons.
A. $784
B. $897
C. $918
D. $1,000
E. $1,087

Answer 1

16

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =5x2

1000 =∑ [(Coupon rate*1000/200)/(1 + 4.5/200)^k]     +   1000/(1 + 4.5/200)^5x2

k=1

Coupon rate% = 4.5

19

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =30x2

Bond Price =∑ [(7*1000/200)/(1 + 9/200)^k]     +   1000/(1 + 9/200)^30x2

k=1

Bond Price = 793.62

Please ask remaining parts separately, questions are unrelated. I have done one bonus