BUS_320_Chapter_7_Assignment_Solutions_10.27.09

# BUS_320_Chapter_7_Assignment_Solutions_10.27.09 - 35 PMT...

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BUS 320 Chapter 7 Assignment Solutions 1) a) CY = 60/960 = 6.25% c) 12, N 1000, FV b) 2, □, P/YR 30, PMT □, BEG/END 6.6, I/YR 960, +/-, PV PV = \$970.67 1000, FV 30, PMT 20, N I/YR = 6.6% 2) 1000, FV 35, PMT 18, N 8.2, I/YR PV = \$924.66 3) YTM: 20, N YTC: 12, N 1000, FV 1090, FV 1120, +/-, PV 1120, +/-, PV 45, PMT 45, PMT I/YR = 7.3% I/YR = 7.7% Expect to earn 6.8% (YTC) since interest rates have declined. 4) Years to Maturity Price of Bond C Price of Bond Z 4 \$1,060.35 \$729.61 3 \$1,047.03 \$789.44 2 \$1,032.59 \$854.17 1 \$1,016.95 \$924.21 0 \$1,000.00 \$1,000.00 5) a) 1) 10, N 2) 10, N 1000, FV 1000, FV 35, PMT

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Unformatted text preview: 35, PMT 860, +/-, PV 1095, +/-, PV I/YR = 10.7% I/YR = 4.8% b) Yes, since the YTM is 10.7% 6) CY = .094 = 80 / Price 14, N Price = \$851.06 1000, FV 40, PMT 851.06, +/-, PV I/YR = 11.1% 7) 18, N Since PMT = \$65, annual interest = \$130. 1080, +/-, PV 1000, FV So, CY = 130 / 1080 = 12.0% 11.5294, I/YR PMT = \$65 8) a) YTM: 1000, FV b) YTC: 1090, FV 28, N 10, N 45, PMT 45, PMT 1155, +/-, PV 1155, +/-, PV I/YR = 7.2% I/YR = 6.8% c) Expect to earn 6.8% (YTC) since interest rates have declined....
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BUS_320_Chapter_7_Assignment_Solutions_10.27.09 - 35 PMT...

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