lab assignment 1

# lab assignment 1 - Exerctse Score 4 OF 4 pts Springﬁeld...

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Unformatted text preview: Exerctse Score: 4 OF 4 pts Springﬁeld Nuclear Energy an. bonds are currently trading at \$1.200is. The bonds have a face value of\$1._000._ a coupon rate of 3.5 the yield 0):, to maturity ofthe bonds is 5.50 “4. (Round to two decimal places.) mule—owl. , 5 Springﬁeld Nuclear Enegy tnc. honds are cttrreitly trading at \$102.54. the hoods haye a race yalue of \$1.000. a coupon rate of 12% pith coupons paid annually. and they mature in 5 years. What is the yield to maturity ofthe bonds? The mathematical formula requires the "tn'alrandrerror" method to solve for 154. Alternativel maturity using a ﬁnancial calculator or an Excel spreadsheet. rou can iind the yield to Calculatur sulutiu n: when solying for the yield to maturity on a coupon hond using a ﬁnancial calculator. you mil need to input the number of coupon periods to maturity for N. the face value ofthe bond for FY. the annual coupon for PMT. the bond price for P\'. and then compute [-‘Y to ﬁnd the ﬁeld to maturity. Rama'an that P\.‘ must he entered as a negative number. Since cornpoundmg is annual, the periods per year setting on your calculator should be set at 1. P'Y : 1. 120 1.000 Note that the annual coupon payment ofthe bond is equal to the face value ofthe hond multiplied by the annual coupon rate: \$1.000 X 0.12 = 120. Hal D l Assignment Score: lost. {4 0F 40 pts) uith coupons paid annually. and they mature in 13 years. What is the yield to ma \ , Exarelse scat-e: 4 on pts Beam Inc. bonds are trading today for a price of \$1214.80. The bond pays annual coupons with a coupon rate ofSV/o and the next coupon is due in one year. The bond has a yield to maturity of 3.49%. How many years are there until the k Assignment soot-at zust (a afAEI tits] The number ofyears until the bond matures is 20 years. (Round to the nearest whole number.) van—team»!— Beam lnc. bonds are trading today for a price of \$1.22o 19. The hond pay-s annual coupons with a coupon rate of 13% and the next coupon is due in one year. The bond has a yield to maturity of 10.50%. How many years are there until the bond matures” Alte'natively. you can ﬁnd the number ofyears using a ﬁnancial calculator. Calculator solution: When solsing for the nurnher otyears to maturity using a ﬁnancial calculator. you tell need to input the bond price for FY. the face value ofthe bond for rv. the annual coupon for PM: the yield to maturity for I'Y. and then compute N to End the number ofyears until maturity. Remember that P'\' must be entered as a negatiye number. since compounding is annual the periods per year setting on your calculator should be set at L P‘Y = l. 10.50 *177619 130 1.000 E El :30 The annual coupon payment ofthe bond is equal to the face value ofthe bond multiplied by the annual coupon rate. \$1.000 x 0.13: 5130. thus the nutan ofyears unttl the bond matures is 30 years. n at“ .4“ 4‘“ /--s x—x. /"\~y x‘a /‘ /"x "--t_ -t_ N. | I | I | I | I I I I <] (1”!) Q 3 x / ~5/ 5/ RT/ “as: xg/ Exercise Sea re: 4 DF4 pts I'he Field to- matm‘itj; on a. bond: (Select the best choice helo-vi'.) Is cornpn'sed ofthe capital gain and mainorﬁzed dollar interest payrnents. Is the effective yield earned only ﬁ'o-m coupon payrnents. Is the disc 01.1111: rate that equates the market price of a Rernai'ns ﬁxed over its life. 7, ,.-L1, .,.,sh1,, techs; , heesesshhw 7., hand with the present value of all <1 (are) :5:- -:s:- rs:- Is:- :9:- faq: 9- | :KE-rciEE— Score: III 0F 4 pts A55i iﬁ’hat is the yield to maturity ofa 9.?93 semiannual coupon h-ond lyith a face 1value of\$1__ﬂﬂ-O selling for \$894.56 that The annual yield to maturity of the bond is: (Select the best choice h-elosy.) I 1,1“... 10.45893 I 13. 9.52893 I 1C. 10.80??in I JD. 11.6292} [:1 E. 12.433926 else Score: 4 of 4 pts Assignment Score: 100% [40 0F 40 ptsl El-year bend pays interest uf \$2120 semiaiulually. has a fate s-‘alue trf \$1.000. and is selling fur \$03.51. lllhat are its :1 yield to maturity".} 1e annual coupon rate is 5.44 as. [Retuul to two decimal plates}. 1e yield ttr mauuitf; is 9.13 as. (Round to two decimal places}. rLth': :rILIu-ru-a ‘1‘ u: ‘1- |_IL:I ﬂbblgllll1ulll :Luru: Luu-xn I‘l-ru u: A-ru 'JL'J‘I l Septenlh-er 2000 the Pullman Group arranged a bond issue for the estate of the late liars-“in Gaye. The collateral on E‘cash ﬂour for interest and principal paynlents) consisted of future royalties ﬁ'orn classic songs such as "XE-‘hat's Goin. hough The Grapevine". The bond issue had a \$1.000 face value and a coupon rate of 593. [fthe bond matures in 26 5, anti — annual coupon; and the yield to maturity is 6°14}. ‘what mill the bond sell for? Calculate your anssyer to tss'o decizn \$869.9? \$9?e.1a v“ \$359.1? \$444.85 \$3?1.35 rLth-E' DLUrT—‘i ‘1' HI ‘1‘ PL: HthgIIIHEIIL Iii—LITE: LULl-e'ﬂ L‘1‘L‘ LII ‘fU PL'JJ ensider a Federal Gus-eminent coup-en hand with a \$1.000 face value and a coupon rate of 1%. Ifthe bond In and - annual eeupens and the yield to nlamrity is 5%. then what will the hand sell fer? v“ \$432.5 tamua 1243:2124 \$1.uuu \$355.1? rcise Score: 4 0F 4 pts Assignment Score: LUCIE-“n [4|] eF4IZI ptsj he honds of‘u’andalay Inc. pay annual coupons at the rate of 133. Ihey mature in 15 years with a face value of\$1._i] .eir yield is fr'i'x’d'i’ \$903.92 “31.21333 \$731.7”) \$1.ooo v“ \$1.o3?_12 ;_:-_-n-_- :rLuru: -r ul -r PL: Huh-IQIIIHEIILDLUru-J: Luu—r'n I\-ru ul -ru IJL'J‘I ;su.tne that Zyﬁcrosoft bonds have just left the printer and have a stated coupon of \$100 [a coupon rate of 10%;} and \$1}. The bonds mature in three years and the next coupon is due in one year. 1E.‘i’hat is the fair price for the bond tod \$1.ooo \$953.52 " \$335.34 \$332.39 \$913.31 Lib-I: ENE—LITE: ‘1‘ UI ‘1‘ PL: ﬁbhlglllnﬂlll DIE—LITE: LUUTD LH‘U LII "l‘|.| |.|L'.'IJ hat is the yield on an "old masters" pajhuhg of Elvis Presley (acrylic on yelyet) that sells for \$1.49ﬂﬂﬂﬂ today and is e thehy's auction in 3 years for \$2.Ei1ii._iiiiii? .e yield (rem) is: (Select the best choice heloy‘i'.) 9'?in :sticn is complete. ...
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