Chapter 6b
1.
Calculate the value of a bond that matures in 30 years and has a face value of $1000.
The coupon rate is 7% and the investor’s required rate of return is 11%.
2.
Inkie McInkerton Inc. is about to issue a 25 year bond with the following terms:
$1000
face value, an 8% coupon payment, and a required market return of 5.5%.
What is
should be the price of this bond?
3.
You are considering buying a bond with the following terms: $1000 face value, a 5%
coupon rate, a price of $972.
How long will the term of this bond be if you require a 6%
return?(Round to nearest year)
4.
You Inc. is issuing bonds with the following terms: $1000 face value, 10% coupon rate,
and a market discount rate of 8%.
If it is priced at $1225.16, how long should You’s
bond term last until maturity?
5.
You are considering buying a 15 year semiannual bond with a $1000 face value, 12%
coupon rate, and a price of $790.
What rate of rate of return will this bond give you?
6.
What is the duration of a 10year bond that has annual coupon payment of 6% and a
$1000 face value?
The discount rate is 12%.
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 Fall '11
 JimBrau
 Finance

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