FIN3403 exam 2 questions

# FIN3403 exam 2 questions - 1. A 8.5%, 25 year, \$1,000 bond...

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1. A 8.5%, 25 year, \$1,000 bond is presently selling at a yield-to-matureity of 9.75%. Assuming annual interest payments, what is the price of the bond? (\$884.32) What is the bond’s price if interest is paid semiannually? (\$883.66) 2. A 9.25%, 30 year, \$1,000 bond is presently selling for \$1,134. Interest is paid annually. What is the bonds yield to matureity? (\$8.0537%) What is the YTM if the bond pays interest semiannually? (8.0588%) What is the bond’s “current yield?” (8.16%) 3. You buy an 8%, 15 year, \$1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond? (-15.74%) 4. Twenty year zero coupon bonds are presently selling for \$283 per \$1,000 face value. What is the YTM on these twenty year zeroes? (6.51) 5. The AVC Corp. paid a dividend of \$3.40 in the year just ended. Assuming, AVC’s dividends are projected to grow at a rate of 4.5% indefinitely, and a fair

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## This note was uploaded on 03/21/2012 for the course FIN 3403 taught by Professor Unknown during the Fall '08 term at FSU.

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FIN3403 exam 2 questions - 1. A 8.5%, 25 year, \$1,000 bond...

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