bondHWfixed - face value of the bond is $10 000 and the...

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1 Homework 1. Find the price of a par bond with face value $3 , 000, nominal coupon rate 7 . 5% con- vertible 12 times per year, lasting for 13 years if the investor’s annual yield rate is 8%. 2. Available are three par bonds Bond 1: 1 year, Face $4 , 000, 3% annual coupon rate Bond 2: 2 years, Face $8 , 000, 5% annual coupon rate Bond 3: 3 years, Face $12 , 000, 7% annual coupon rate You owe $30 , 000 in 1 year $40 , 000 in 2 years $50 , 000 in 3 years How much of each bond should you buy so that the payments exactly match your debt. 3. Your purchase a 30 year bond with semiannual coupons with nominal rate 16%. If the
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Unformatted text preview: face value of the bond is $10 , 000, and the redemption amount is equal to the price of the bond, what is the price of the bond? 4. The price of a 14 year bond is $5 , 000. The face value of the loan is twice that of the redemption amount. Coupons are paid quarterly and the nominal coupon rate is 12%. The bond is priced according to a 9% annual yield. You can invest money at a 6% annual yield. What is the dierence in money earned if you invested $5 , 000 for 14 years or invested your bond payment for 14 years? 5. 6....
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