Question

# <br/> -Yest Corporation's bonds have a 12-year maturity, a 8% semiannual

coupon, and a par value of \$1,000. The market interest rate (r) is 6%, based on semiannual compounding. What is the bond's price?
-A 15-year, \$1,000 par value bond has a 7% annual coupon. The bond currently sells for \$925. If the yield to maturity remains at its current rate, what will the price be 4 years from now?
-Meade Corporation has 5-year, \$1,000 par value bonds that have a yield to maturity of 7.5% and a 10% annual coupon rate. What are the current and capital gains yields on the bonds for this year?
- A 10-year, 10% semiannual coupon bond has a par value of \$1,000. The bond has a price of \$1,150.   What is the bond's nominal yield to maturity?
- Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.25%, a maturity premium of 0.08% per year to maturity applies, i.e., MRP = 0.08%*t, where t is the years to maturity. Suppose also that a liquidity premium of 0.5% and a default risk premium of 0.85% applies to A-rated corporate bonds. How much higher would the rate of return be on a 10-year A-rated corporate bond than on a 5-year Treasury bond?
-Skylab Technologies issued 102year bonds yesterday at their par value of \$1,000. These bonds pay \$60 in interest every six months, and their price has remained at the \$1,000 issue price. Skylab's CFO has determined that the firm needs an additional \$2,000,000, and has decided to issue 10-year, \$1,000 par value bonds that pay only \$50 in interest every six months. If both bonds are to provide investors with the same yield, how many new bonds must Skylab issue to raise \$2,000,000? (Ignore the day or two difference between the bonds' issue dates)  