FIN300 Introduction to Managerial Finance
Professor H. Wang
Problem Set #4
Due: Monday, March 1, 2010
Please make sure to write clearly the name
of each member in the group.
Please
turn in your solutions at the beginning of the lecture on the due date.
Late
submissions or submissions by groups larger than four students will not be accepted.
1.
Consider a 10year bond with a face value of $1000 that has a coupon rate of 5.5%,
with semiannual payments.
a.)
What is the coupon payment for this bond?
b.)
Draw the cash flows for the bond on a timeline.
2.
The current zerocoupon yield curve for riskfree bonds is as follows:
Maturity
1
2
3
4
5
YTM
5.00%
5.50%
5.75%
5.95%
6.05%
a.)
What is the price per $100 face value of a twoyear, zerocoupon, risk
free bond?
b.)
What is the price per $100 face value of a fouryear, zerocoupon, risk
free bond?
c.)
What is the riskfree interest rate for a fiveyear maturity?
3.
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 Spring '08
 Finance, Andrew, Andrew Industries

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