Citigroup POW

Citigroup POW - BusinessManagement301 Day8...

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Business Management 301 Day 8 Midterm Exam Review July 14, 2011
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POW #6 : POW #6 : Citigroup Inc Case Citigroup Inc Case
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Question 1 Citigroup offers a variety of coupon bonds that range  form 5-30 years until maturity.  For example,  Citigroup has a 30 year coupon bond that is due in  2033.    The bond’s market value was  $941.12  and had  26  years until maturity .  The bond is a  semiannual   annuity and has a  coupon rate of 5.875% . How much will the semiannual interest payment  be for the bond?
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Question 1: Solution The bond’s market value was  $941.12  and had  26  years until maturity .  The bond is a  semiannual   annuity and has a  coupon rate of 5.875% . How much will the semiannual interest payment be for  the bond? Semiannual Annuity PMT: ? [0.05875 x 1000 = 58.75; 58.75/2 = $29.38] $29.38
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Question 2: Part 1 The bond’s market value was  $941.12  and had  26  years until maturity .  The bond is a  semiannual   annuity and has a  coupon rate of 5.875% . Calculate the YTM for the 26 years remaining on the bond. Semiannual Annuity PV: -$941.12 FV: $1000 PMT: $29.38      [0.05875 x 1000 = 58.75; 58.75/2 = $29.38] N: 52      [26 x 2 = 52]  I: ?  YTM: 6.3411%       [3.1706% x 2 = 6.3411%]
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Question 2: Part 2 The bond’s market value was  $941.12  and had  26 years  until maturity .  The bond is a  semiannual  annuity and has a  coupon rate of 5.875% . What would the YTM be if it was a 15 year bond that had the full 
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This note was uploaded on 11/17/2011 for the course BUS M 301 taught by Professor Jimbrau during the Summer '11 term at BYU.

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Citigroup POW - BusinessManagement301 Day8...

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