stockandbondpracticeset

# stockandbondpracticeset - Stock and Bond Practice Problems...

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Stock and Bond Practice Problems 1. You are evaluating a 9% coupon corporate bond with a face value of \$1000.  The  bond matures in six years. The yield to maturity is 6.8% and the coupon is paid  annually.  a. What should be the current price of the bond?   b. Draw the timeline for this bond, showing current price, coupon payments,  face value, years to maturity and yield to maturity.   2. The E. Harris Company issued bonds on February 1, 1992. When issued, the bonds  had 20 years to maturity, a coupon rate of 7.5% and sold for their face value of  \$1,000. Now, on February 1, 2002, the bond price has risen to \$1,110.40. What is  the current yield to maturity (assume that the bonds make annual coupon  payments)? 3. Suppose you are asked to analyze three bonds. Bond A matures in 1 year, Bond B  matures in 5 years, and Bond C matures in 15 years. Each of the three bonds has a  coupon rate of 6% (paid annually) and a yield to maturity is 3.8%.

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## This note was uploaded on 03/15/2012 for the course BUS-F 301 taught by Professor T during the Spring '12 term at IUPUI.

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stockandbondpracticeset - Stock and Bond Practice Problems...

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