Ch_07_Inclass_Exercise_Solutions_02

Ch_07_Inclass_Exercise_Solutions_02 - Ch 07 Inclass...

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1 Ch 07 Inclass Exercises Solutions 1. Suppose you are looking at a bond that has a 6% annual coupon and a face value of \$1000. There are 16 years to maturity and the yield to maturity is 5%. What is the price of this bond? Annual Coupon Bonds Find Current Price Coupon Rate 6.00% Years 16 Yield-to-Maturity (YTM) 5.00% Face Value 1,000 # of periods 16 Coupon Payment per period 60 Period rate 5.0000% APR 5.00% EAR 5.00% Current Price 1,108.38 2. Suppose you are looking a 9 year semiannual coupon bond with a coupon rate of 6.5% and priced to yield 7% to maturity. What is the price of this bond? Semiannual Coupon Bonds Find Current Price Coupon Rate 6.50% Years 9 Yield-to-Maturity (YTM) 7.00% Face Value 1,000 # of periods 18 Coupon Payment per period 32.5 Period rate 3.5000% APR 7.00% EAR 7.12% Current Price 967.03

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2 3. Consider a bond with a 7.5% annual coupon rate, 12 years to maturity and a par value of \$1,000. The current price is \$909.35.
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This note was uploaded on 11/29/2011 for the course FINANCE 332 taught by Professor Linney during the Fall '11 term at Guilford Tech.

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Ch_07_Inclass_Exercise_Solutions_02 - Ch 07 Inclass...

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