BU111 Spring 2012 - Supplementary Questions

Price of the bond is the sum of the present values

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Unformatted text preview: (single payment) 5. Price of the bond is the sum of the present values Problem 6 A bond with a coupon rate of 5% is offered for a price of $1,020. The bond matures in 6 years. Calculate the approximate yield to maturity. Problem 7 How much would a rational investor pay for a BIEBS 9 of December 4, 2021 if the market interest rate is at 4%? Problem 8 Fill in the blanks for each of the following inequalities with “<” , “>” or “=”. c) For bonds sold at premium: Market Rate ____ Coupon Rate d) For bonds sold at par: Market Rate ____ Coupon Rate e) For bonds sold at discount: Market Rate ____ Coupon Rate Raising Marks. Raising Money. Raising Roofs. www.schoolsos.com Students Offering Support: Wilfrid Laurier University Time Value of Money Steps to Success: 1. Draw a timeline (optional) – this may help with Step #2 2. Determine what kind of investment it is and if you are calculating the future value or the present value – this will help you choose which formula(s) to use - Single Paym...
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