Week 6 635 Solutions

# Week 6 635 Solutions - Chapter 5 Bonds Bond Valuation and...

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Bonds, Bond Valuation, and Interest Rates 5-7 The problem asks you to find the price of a bond, given the following facts: N = 16; I/YR = 8.5/2 = 4.25; PMT = 50; FV = 1000. With a financial calculator, solve for PV = \$1,085.80 5-8 With your financial calculator, enter the following to find YTM: N = 10 × 2 = 20; PV = -1100; PMT = 0.08/2 × 1,000 = 40; FV = 1000; I/YR = YTM = ? YTM = 3.31% × 2 = 6.62%. With your financial calculator, enter the following to find YTC: N = 5 × 2 = 10; PV = -1100; PMT = 0.08/2 × 1,000 = 40; FV = 1050; I/YR = YTC = ? YTC = 3.24% × 2 = 6.49%. 5-9 a. 1. 5%: Bond L: Input N = 15, I/YR = 5, PMT = 100, FV = 1000, PV = ?, PV = \$1,518.98. Bond S: Change N = 1, PV = ? PV = \$1,047.62. 2. 8%: Bond L: From Bond S inputs, change N = 15 and I/YR = 8, PV = ?, PV = \$1,171.19. Bond S: Change N = 1, PV = ? PV = \$1,018.52. 3. 12%: Bond L: From Bond S inputs, change N = 15 and I/YR = 12, PV = ? PV = \$863.78. Bond S: Change N = 1, PV = ? PV = \$982.14. b.

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## This note was uploaded on 02/27/2012 for the course BUS 510 taught by Professor Mehdi during the Spring '11 term at University of La Verne.

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Week 6 635 Solutions - Chapter 5 Bonds Bond Valuation and...

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