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IF Homework Set 3

# IF Homework Set 3 - BUSFIN 1030 Introduction to Finance...

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BUSFIN 1030 – Introduction to Finance Homework Set 3 1. Consider a 30-year bond that has a face value of \$1,000 and a coupon rate of 9% with semiannual coupon payments. The YTM of the bond is 4%. a. What is the maximum price would you be willing to pay for this bond right now? b. What is the maximum price would you be willing to pay for this bond right after its 13 th coupon payment? c. What is the maximum price would you be willing to pay for this bond right after its 13 th coupon payment if YTM at the time is expected to be 11%? 2. Using the information about the Treasury bill as of October 2, 2009 in the table below, answer parts a and b . Maturity Bid Asked Asked yield 2010 Mar 11 0.113 0.103 0.104 a. Calculate the bid and asked prices of this T-bill if its face value is \$100. b. Verify that the asked yield of this T-bill is 0.104. 3. Using the information about the Treasury note as of October 2, 2009 in the table below, answer parts a and b . Maturity
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