UGBA+103+Problem+set+_4-1 - UGBA 103 Problem set #4 GSI:...

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UGBA 103 – Problem set #4 GSI: Florent Rouxelin 8-1. A 30-year bond with a face value of $1000 has a coupon rate of 5.5%, with semiannual payments. 8-2. Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 8-7. 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? 8-8. The prices of several bonds with face values of $1000 are summarized in the following table: For each bond, state whether it trades at a discount, at par, or at a premium. 8-11. Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1000, and a coupon rate of 7% (annual payments). The yield to maturity on this bond when it was issued was 6%. 8-17. What is the price today of a two-year, default-free security with a face value of $1000 and an annual coupon rate of 6%? Does this bond trade at a discount, at par, or at a premium?
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This note was uploaded on 09/11/2011 for the course UGBA 103 taught by Professor Berk during the Spring '07 term at University of California, Berkeley.

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UGBA+103+Problem+set+_4-1 - UGBA 103 Problem set #4 GSI:...

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