Copy of 280278

Copy of 280278 - Week 3 Problem Set Solutions 5-1: Bond...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 3 Problem Set Solutions 5-1: Bond Valuation with Annual Payments. Jackson Corporations bonds have 12 years remaining to maturity. Interest is paid annually, the bonds ha coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price o The current price is the PV of interest and principal. We use the PV function to calculate the current pric Maturity 12 years Par value 1,000 Annual Interest 80 YTM 9% Current Price $928.39 5-2: Yield to Maturity for Annual Payments. Wilson Wonders bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a coupon interest rate is 10%. The bonds sell at a price of $ 850. What is their yield to maturity? The YTM is the discounting rate that will make the present value of interest and principal equal to the price today. We use the RATE function to calculate the YTM Maturity 12 Par value 1,000 Annual Interest 100 Price 850 YTM 12.48% 5-3: Current Yield for Annual Payments. Heath Foods bonds have 7 years remaining to maturity. The bonds have a face value of $ 1,000 and a y pay interest annually and have a 9% coupon rate. What is their current yield? Current Yield is Annual Interest / Price We first calculate the price The current price is the PV of interest and principal. We use the PV function to calculate the current pric Maturity 7 years Par value 1,000 Annual Interest 90 YTM 8% Current Price $1,052.06 Current Yield 8.55% 5-7: Bond Valuation with Semiannual Payments. Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds matu of $ 1,000, and a yield to maturity of 8.5%. What is the price of the bonds? The current price is the PV of interest and principal. We use the PV function to calculate the current pric Maturity 16 semi annual period Par value 1,000 Semi annual Interest 50 Semi annual YTM 4.25% Current Price $1,085.80 5-8: Yield to Maturity and Call with Semiannual Payments. Thatcher Corporations bonds will mature in 10 years. The bonds have a face value of $ 1,000 and an 8%
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
semiannually. The price of the bonds is $ 1,100. The bonds are callable in 5 years at a call price of $ 1,0 maturity? What is their yield to call? The YTM is the discounting rate that will make the present value of interest and principal equal to the price today. We use the RATE function to calculate the YTM Coupon interest 40 Semi annual Price 1,100 Face Value 1,000 Periods to Maturity 20 Semi annual YTM 6.62% The YTC is the discounting rate that will make the interest and call price equal to the price today Coupon interest 40 Semi annual Price 1,100 Call Price 1,050 Period to Call 10 Semi annual YTC 6.49% 6-1: Portfolio Beta. An individual has $ 35,000 invested in a stock which has a beta of 0.8 and $ 40,000 invested in a stock the only two investments in her portfolio, what is her portfolios beta? Portfolio beta is the weighted average beta
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/18/2011 for the course BUSN 5000 taught by Professor Online during the Spring '10 term at Webster.

Page1 / 14

Copy of 280278 - Week 3 Problem Set Solutions 5-1: Bond...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online