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Unformatted text preview: Calculate: (a) Kirsten&s internal rate of return. (b) Assuming Kirsten reinvests each coupon at 2% compounded monthly, what is the annual e/ective rate of return earned by Kirsten over the 3.5 years? 3. Two bonds, each of face amount 100, are o/ered for sale at a combined price of 200 Both bonds have the same term to maturity but the coupon rate for the one is twice that of the other. The di/erence in price of the two bonds is 16. Prices are based on a nominal annual yield rate of 6% compounded semiannually. Find the coupon rates of the two bonds. 4. A 6% bond with face amount 1000 is redeemable in k years and is pur-chased for 1250. A 5% bond with the same face amount and the same redemption date as the rst bond has a purchase price of 1050. The nom-inal annual yield rate is the same for both bonds. Find that rate. 1...
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- Spring '09