BUAD 306 Z SPRING homework2 Solutions Z

# BUAD 306 Z SPRING homework2 Solutions Z - BUAD 306 Z SPRING...

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BUAD 306 Z SPRING homework2 Solutions Z Chapter 7 1. Yes, YTM is required return. NO, YTM is not coupon rate. The value of the bond rises because new bonds issued for \$1000 only pay \$40 every six months and yours pays \$50 every six months. The coupon rate is unchanged at 10 percent. The YTM is now 8%. 2. The value of your bonds falls since interest rates have increased. Your bond only pays \$35 every six months and new bonds are paying \$75 every six months. 3. \$935.82 4. 5.83% 5. 6.078% 6. \$947.05 7. 8.60% 8. 8.30% 9. 3.5% and 3.35% 10. 10.03% 11. 7.48% 12. 8.45% 13. NA 14. NA 15. Po = \$1167.15 ; \$850.26 ; P1=\$1158.85; \$856.79 ; P3 = 1140.47 ; 871.65 ; P8 = \$1082.00 ; \$922.21 ; P12=\$ 1018.69 ; \$981.65 ; P13 = 1000 ; 1000 16. +2% change sam = -3.55% ; change dave = -15.37% ; -2% change sam = 3.72% ; change dave = +19.60% 17. +2 % change j = -12.15% ; change k = -10.28% ; -2% change j = 14.19% ; change k = 11.87% Chapter 8 1. Po = \$28.27 ; P3 = \$33.67 ; P15 = \$67.74 2. 10.21% 3. div. yield = 5.21% , cap gain yield = 5%

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## This note was uploaded on 07/21/2009 for the course BUAD 306 taught by Professor Selvili during the Spring '07 term at USC.

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BUAD 306 Z SPRING homework2 Solutions Z - BUAD 306 Z SPRING...

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