170 midterm - Chapter 5 Questions 1 . A nineyear bond with...

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  1. A nine-year bond with an 8% coupon rate has a yield to  maturity of 7%   a) What are the annual payments (pmt)? $80 b) What is the present value of the bond (pv)? = (6.5152*80)+(10000*.5439)  = 521.216 + 543.90 = 1065.12 c) What is the present value of the bond if the YTM is  6%?  = (6.8017*80) + (1000*.5919) = 544.136 + 591.9 = 1136.04 d) Is your answer above consistent with what we know  about the relationship between interest rates and  bond prices? yes   2. An 8% annual coupon bond is currently selling for $897 ( Po  ), and matures in 30 years. What is this bond’s yield to  maturity (YTM)? (multiple choice)   a) 8% b) 9% c) 10% d) 11%   3. A nine-year bond sells today for $1065.15 and has a yield  to maturity of 7%.  What is this bond’s coupon rate?  1065.15 = (6.5152pmt) + (1000*.5439)
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170 midterm - Chapter 5 Questions 1 . A nineyear bond with...

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