FIN+3403+SPRING+2006+exam+3

FIN+3403+SPRING+2006+exam+3 - FIN 3403 SUMMER 2006 EXAM 3...

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FIN 3403 SUMMER 2006 EXAM 3 Name: ____________________________ Round percentages to 2 decimals (0.00%) and round dollar figures to the penny. Round all other answers to two decimal places. Write your answers in the left column next to the question. Keep your answers covered. I anticipate the questions will count for 5 points each. Note that the triple point challenge questions and the 20 point bonus give you the opportunity to earn 125 points. 1. 5 POINTS: An investor has a required rate of return of 15%. What is the most that he will pay for a bond that matures in 9 years, has a par value of $1,000, and a coupon interest rate of 11% paid annually? 2. A 6% bond (coupon rate = 6%) has an 8% yield to maturity (YTM). It matures in 5 years and has a $1,000 face value. What is the price of the bond? 3. An 8% bond has a 6.5% yield to maturity (YTM). Is this a discount, par, or premium bond? 4. A 5% bond is currently selling for $750. It matures in 8 years and has a par value of $1,000. What is its YTM? 5. Find the value of a bond maturing in 9 years with a $1,000 par value and a coupon interest rate of 14% per year if the required return on similar-risk bonds is 18% per year. The bond pays quarterly coupons. 6.
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This note was uploaded on 02/09/2012 for the course MGT 3078 taught by Professor Marchman during the Spring '12 term at Georgia Institute of Technology.

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FIN+3403+SPRING+2006+exam+3 - FIN 3403 SUMMER 2006 EXAM 3...

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