E120_SUM11_HW3

E120_SUM11_HW3 - E120 Homework 3 Due 07/15/2010 Problem 1:...

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E120 Homework 3 Due 07/15/2010 Problem 1: A 30-year bond with a face value $1000 has a coupon rate of 5.5%, with semiannual payments. 1. What is the coupon payment for this bond? 2. Draw the cash flows for the bond on a timeline. Problem 2: Assume that a bond with make payments every six months for 20 periods (using six- month periods): (0, $20, $20, . .., $20, $20+$1000). 1. What is the maturity of the bond (in years)? 2. What is the coupon rate (in percent)? 3. What is the face value? Problem 3: Suppose a ten-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading for a price of $1034.74. 1. What is the bond’s yield to maturity (expressed as an APR with semiannual com- pounding)? 2. If the bond’s yield to maturity changes to 9% APR, what will the bond’s price be? Problem 4: Suppose a five-year, $1000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond’s coupon rate?
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Problem 5: Suppose a seven-year, $1000 bond with an 8% coupon rate and semiannual coupons is
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This note was uploaded on 08/15/2011 for the course ENGR 120 taught by Professor Alder during the Summer '11 term at Berkeley.

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E120_SUM11_HW3 - E120 Homework 3 Due 07/15/2010 Problem 1:...

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