Fall 2008 Engineering 120 September 10, 2008 Page 1 of 2 Homework #3 Note: For all the bonds below, assume a face value of $1000. 1. Carpenter, Inc., has 8 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 9 percent, what is the current bond price? 2. Linebacker Co. has 7 percent coupon bonds on the market with nine years left to maturity. The bonds make annual payments. If the bond currently sells for $1080, what is the YTM? ( Hint: Trial and error. . It is between 5% and 6%). 3. Hawk Enterprises has bonds on the market making annual payments, with 16 years to maturity, and selling for $870. At this price, the bonds yield 7.5 percent. What must the coupon rate be on the bonds? ( Note: 7.5% is the YTM). 4. Cutler Co. issued 11-year bonds a year ago at a coupon rate of 7.8 percent. The bonds make semiannual payments. If the YTM on these bonds is 8.6 percent, what is the current bond price?
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This note was uploaded on 06/15/2009 for the course ENGIN 120 taught by Professor Ilan during the Fall '08 term at Berkeley.