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MA373 S12 Homework Chapter 6

# MA373 S12 Homework Chapter 6 - Chapter 6 Section 2 1(F11HW...

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March 2, 2012 Chapter 6 Section 2 1. (F11HW) Yancy purchases a 10 year zero coupon bond for 500 and will be paid 1000 at end of 10 years. Calculate the annual effective return received by Yancy. 2. (F11HW) A 20 year bond with a par value of 10,000 will mature in 20 years for 10,500. The coupon rate is 8% convertible semi-annually. Calculate the price that Andrew would pay if he bought the bond to yield 6% convertible twice a year. 3. (F11HW) A 20 year bond with a 20,000 par value pays semi-annual coupons of 500 and is redeemable at par. Audrey purchases the bond for 21,000. Calculate Audrey’s semi -annual yield to maturity on the bond. 4. (F11HW) Marissa purchases 20 year bond. The bond matures for 100,000. The bond has annual coupons. The first coupon is 1000. The second coupon is 2000. The third coupon is 3000. The coupons continue to increase until the 20 th coupon is 20,000. Marissa purchase the bond to yield an annual effective rate of 8%. Calculate the price that Marissa pays for the bond. 5. (S12HW) Siqi bought a 10 year bond four years ago. The bond matures for 100,000 which is the par value. The bond has a coupon rate of 9.2% convertible semi-annually. Siqi paid 102,000 for the bond. Today the bond has exactly six years until maturity. Calculate the price at which Siqi could sell the bond if: a. The bond is sold to yield the same yield that was used to when Siqi bought the bond. b. The bond is sold to yield 8% convertible semi-annually. 6. (S12HW) Katherine buys a bond to yield 8% convertible semi-annually for a price of 19,001.44. The bond has a coupon rate of 7% convertible semi-annually. The bond matures for 20,000 which is its face value. Determine how many years until the bond matures. 7. (S09T2) Charles buys a 50 year bond with semi-annual coupons. The bond matures for 1000. Each semi-annual coupon is 5 during the first year. Each semi-annual coupon is 10 during the second year. The semi-annual coupon continues to increase

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MA373 S12 Homework Chapter 6 - Chapter 6 Section 2 1(F11HW...

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