This preview shows page 1. Sign up to view the full content.
Unformatted text preview: (single
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...
View Full Document
- Fall '08