FIN 300 Quiz 3 Bond Solutions.pdf

FIN 300 Quiz 3 Bond Solutions.pdf - QUIZ 3 SOLUTIONS FOR...

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QUIZ 3 SOLUTIONS FOR BOND PROBLEMS 1. Builtrite bonds have the following: 7 1/4% coupon, 12 years until maturity, $1000 par and are currently selling at $1042. If you purchase this bond, what would be your AYTM? AYTM = 72.50 + (1000 1042)/12 = 6.7% (1000 + 2(1042))/3 Builtrite bonds have the following: 6 3/4% coupon, 18 years until maturity, $1000 par and are currently selling at $963. If you purchase this bond, what would be your AYTM? AYTM = 67.50 + (1000 963)/18 = 7.1% (1000 + 2(963)0/3 2. Builtrite bonds have the following: 6 3/4% coupon, 18 years until maturity, $1000 par and are currently selling at $988. If you want to make an 6% return, what would you be willing to pay for the bond? BV = 67.50(D-46%,18 = 10.828) + 1000 (D-36%,18 = .350) = $1081 Builtrite bonds have the following: 7 1/4% coupon, 12 years until maturity, $1000 par and are currently selling at $952. If you want to make an 6% return,
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  • Fall '08
  • Olander
  • Finance, Builtrite bonds, equivalent yield, City of Tempe

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