Homework 3 - Fall 2008 Engineering 120 Industrial...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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?
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/15/2009 for the course ENGIN 120 taught by Professor Ilan during the Fall '08 term at Berkeley.

Ask a homework question - tutors are online