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Unformatted text preview: L 41. A IGJJEII] par value I IIIyear band with 3% annual coupons is bought at a premi  to yield an annual affecﬁw rate of 6%. Calculate the interes: porlinn of H16 Th coupon. (A) 632 (E) 542 (c; 551 (D) (1151) {E} 45:51
Jf‘IR
Lt, . LR...» May .E'ﬂfﬂ 6? A lﬂﬂﬂ par value 5year band will: 3.3% semiannual couponswee heughlte yield 15% eunvem'ble eemiennuelly. Determine the amount ef premium merited in me 15"“ CD'IIPGII payment. (0 (A) 2.0:)
(H) 2.138
(a) 2.15
(D) 2.25
{E} 2.34 31. You have decided lo invest in two heads. Bond X is an n—year hond wild] semiannual eeupenaI while bond Y is an accumulation bond redeemable in 3; yeara. The desired yield rate in the some for both henw. You also have the following Information: 13de 4' Per value i5 IDIJEI . I The ratio of the semiannual baud rate to the deairetl semiannual yield rate, 1” r
is 1.113125 . II The preath value of lhe redemption value ia 331.513 . EondY m I Redemption value is the same as the redemption value efhond X . 1 Prlee to yieldia 6413i} _ 1What is the prlee efhond X?
(A) 11319
{E} 1029
(C) lose
[D] Iﬂﬁﬁ
{E} lﬂﬂ f“. {'0 Coulee 2. Nommlier Jill” b _ _ _ .. [fag
'  dull. Among a epinpnny’eeeeem and eeeeunting reeerde., an neutraly ﬁnds a. 15year hepd that was purchased at e pmnittm. F mm the records, the sacrum3r has determined die fellewing: (i) The hand peye semi—annual interest. {ii} The meant fer emerlizerien ef Ihe premium in the 2"" eeupen
paymmt was Will} . {iii} The emme fer emurﬁzaﬁnn of the premium in Ihe 4m eeupen
 pﬂ'ylneut wee “146.79 . What is the value at“ the premium? C
H {A} 17,3 I55 {B} 24,134
{E} 26,549
{D} 43339
{E} 511,445 A
U
U Emmi: .3 —.! LC " an. A lﬂﬂﬂ par value Elliyear bend wiih annual coupons and redeemable a: meum'ty a: lﬂiﬂ is purchased furP lu yield an eIque] eFfeetive rate of 3.25% . The ﬁrst en en in T3 . Eeeh subSegment coupon is 3% greuter than the preceding
up cnupun. Determine P . (A) 935
(B) mm
a I (C) mm
L (D) 14375
It
[E] 11 15
C
an! ‘9 Farm Uﬂﬁ re a
L. UNITE  Susan can buy a z_Ero coupon bond that will pay mm at tho cud of 12 years and is
currently selling for 624.60 . Instead she purchases a 6% bond wilh coupons payable
seminannually that will pay lﬂﬂﬂ at tho and of ll] yours. If she pays Xsho will caln the some annual oFFootivo 'rntortst rate as the 2:11: coupon bond. Caloolato X.
(A) 1 154
{El} 115?
{C} 1 no
(o) 1 no LL [E] 1 11's a
FV
L, Course FM :@ 41. Bill buys a 10—year mm par value 5% bend with semimun] coupm. The assumes a neminu] yield of 5%, cﬁmpnunded saﬁiannually. As Bill receives eeeh emtpun payment, he immediater pun ﬂ1e mﬁnﬂf into an eeenunt earning interest El an annual efeeﬁve rate eff . A: the end uf 1!] years, immeadia‘lely after Bill receives the EnuJ eeupen payment
and the mdempﬁen value 111‘? ﬁle bend. Bill has main menu] We yield ufﬁﬁ e11 hi5 invesnnent in the bond. n Calculate i .
L'"
{A} 9.59%
{B} 9.15%
[C] mom
(13) “use:
{E} lﬂjﬂ'ﬁi 1 0 ='.Lca_1' ﬁrm C ‘ 11. An investor borrows an amount at an annual effective interest rate of 5% and will repay
all interest and principal in a lunip sum at the end of ll] years. She uses the amount
borrowed to purchase a lﬂﬂl} par value lﬂyear'bond with 3% Semiannual coupons bought to yield 4.5% convertible semiannually. All coupon payments are reinve5tedat a nominal rate of4% convertible semiannualiy. Calculate the net gain to the investor at the end of l I] years aﬁer the loan is repaid. (A) as
(a) rat
[C] me
ﬁx
b (D) I 11
L (E) 115
.ﬂ. C" Harem bar 2905 Course FM ‘0 ‘0 Course 3 L A ﬁrm has prepesed Ihe following restructuring fer ene ei‘ its 1 eee par value bends. The bend presenllyr has lﬂ years remaining until maturity. The ceupen raie en die
existing bend is 6.15% per anmn'n paid semiannually. The C'un‘El'l‘i neminal semiannnsl yield en the bend is 'I.4[i% . The cempan}r piepeses suspending ceupen payments fer fenr years will] the suspended
ceupen paymenis being repaid. with seemed interest.I when the bend eemes due. Accrued interest is ealeulsled using a neminsl semiannual ra1e ef T.4ﬂ% . Calculsnetbe marked valne ef‘rhe restructured bend. (A) T55
(is) see
(C) ass
(e) 9e:
{E} 955 C I . L 11. A lﬂﬂﬂ par value band with eaupana at 9% payable sert'tia.rt1‘n.tall1ur was ealled far I lﬂﬂ priar ta maturity. The bandwas haaght far 9] E irt'tmediatelgur after a eeupen payment and was held ta call. The nerninal yield rate eanverlihle semiannuall}.r Was lﬂ‘Vn. Caleulate ihe nuniber efyeam the hand was held. {A} m
{a} 25 '
{C} 39 I C (D) 49 5' {E} 54 Cotmam F.1d Naval“ bar 2005 In. 55. Tool;r purchased a Zﬂvear par value bond with semiannual ooupons at a nominal
annual rate of 5% convertible aemiannuallvI at a price of ‘l?22.25. The bond canbe called at par value ‘I‘IEIU on anyI coupon datestarting at the end of 1veer 15. What is the minimum vielo that Tohv ooulo reoeive. expressed as a nominal annual rate of inlereet convertible eemiannuallv? {A} 3.2%
{e} 3.3%
{o} 3.4%
{o} 3.5%
(E) 3.5% 1 1ft] Emil 55. Sue purchaaed a iiiyear par value hand with semiannual ccupcna at Ml annual rate cf4% Wat a price at 11321.50. The hand can he called at par value X en any ccupcn date starting at the end cf year 5. The price guarantees that Sue will receive a ncminel annual rate of interest ccnvertible aemiannually at at least 6%. Calculate X.
[A] '1 12d
{E} 1 ‘l 4 D
{C} 1 1m
{D} 1 13d
{E} 12131:: ‘l ‘lfﬂBlDd r} 11. A lllllll} par value bend pays annual ceupens ef Ell. The bend is redeemable at per in 3D years, but is callable any time li'ern the end e1" Ihe “3".” year at IDSD. Based en her desired yield rate, an invester calculates d'le Feilewing petential purchase prices, P: Assuming the bend is called at d'le end ef the lil"1 year, P = 95'? Assuming the bend is held until maturity, P= Ell? The inyester buys the bend at me highest price that guarantees she will receive at least her desired yield rate regardless et'when the band is called.
The invester helds the bend t'er Ell years, aﬁer which time the bend is called. Calculate the annual yield rate Ihe invester earns. [A] 3.55%
(a) sense
(C) 9.24%
{D} 9.53%
{E} 9.99% Course FM l  May Mile": 441* A 1D,t'.tt'Jﬂ par value bond with coupons at 3%. convertible semiannually, Is being sold 3
years and 4 months before the bond matures. The purchase will yield 5% convertible
semiannuallzlr to the buyer. The price at the most recent coupon date, immediater alter the coupon payment. was 554D. W Calculate the market price of the bond. assuming compound interest throughout. {A} soon
{a} 552D f‘x
LL {C} 554o
{D} ssso
{E}553D " Reprinted Wiﬂ'l permission li'om ACTEX Publications. .fh‘k L‘s—f 1 ‘1 fﬂﬂlﬂii f‘k. t‘.’ A tooo bond with seminannuel coupons mtﬂ: mature: at par on October “I5r 2D2D. _ _ ‘Tne hand is purchased an June 23, 2on5 to yiettt the investor if2t = m. What 15 the
Wﬁeprcohaeepnoe? Aeeume simple interest between bond coupon dates and note that: Date Day of the Year April15 1135 June 23 1TH October 15 233
v [A] BUG
L I get go? {C} QUE. to) 919 (E) 925 r“\ Lid
1 1toato4 ...
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This note was uploaded on 03/02/2012 for the course MATH 172 taught by Professor Kong during the Winter '09 term at UCLA.
 Winter '09
 kong

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