pq56 - Practice Question 5 and 6 Chapter 5 Practice 1 a)...

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Practice Question 5 and 6 Chapter 5 Practice 1 a) What is the present value of a 5-year security with coupon rate of 7% that pays annually assuming a discount rate of 5% and par value of $100 b) A 5-year amortizing security with a par value of $10,000 and a coupon of 5% has and expected cash flow of $2.309.75 per year, assuming there are no principal prepayments. The annual cash flow includes interest and principal payment. What is the present value of this amortizing security assuming a discount rate of 6%? Practice 2 What is the present value of the cash flow of the 5-year 7% coupon security in Practice 1 assuming a discount of 4% rather than 5%? Practice 3 a) What is the value of a 5-year 7% coupon bond per $100 of par value when the discount rate is 6%, 7% and 8%? b) Show that the results obtained in part a are consistent with the relationship between the coupon rate, discount rate and price relative to par value given in the text Practice 4 Compute the value per $100 of are value of a 5-year 7% coupon bond, assuming the
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pq56 - Practice Question 5 and 6 Chapter 5 Practice 1 a)...

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