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problem set on bonds

# problem set on bonds - Hakan ERTA 1 Tigers bonds have 10...

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Hakan ERTAŞ 1. Tiger’s bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a \$1,000 par value, and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 %. What’s the current market price of these bonds? PV= 80.PVAF(10,%9) + 1000.PVIF(10,%9) = -935,83 2. Iron Corporation’s bond will mature in 10 years. The bonds have a face value of \$1,000 and an 8% coupon rate, paid semiannually. The price of the bonds is \$1,100. The bonds are callable in 5 years at a call price of \$1,050. What is the yield to maturity? What is the YTC? YTM 1100 = 40.PVAF(20, i ) + 1000.PVIF ( 20,i) = 3,31 , YTM = 3,31x2 = 6,62 YTC 1100 = 40.PVAF(10,i) + 1050.PVIF (10,i ) = 3,24 , YTC = 3,24x2 = 6,48 3. Nuns Corporation has issued bonds that have a 9% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of \$1,000, and a yield to maturity of 8.5%. What is the price of the bonds? PV = 45.PVIF( 16, 4.25) + 1000.(16, 4.25) = 1028,60 4. A bond that matures in 10 years sells for \$985. The bond has a face value of \$1,000 and a 7% annual coupon.

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