E120
Homework 3
Due 07/15/2010
Problem 1:
A 30year 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 tenyear, $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 ﬁveyear, $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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View Full DocumentProblem 5:
Suppose a sevenyear, $1000 bond with an 8% coupon rate and semiannual coupons is
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 Summer '11
 ALDER

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