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ABC has issued a $1000 par bond with 25 years to maturity, 7% coupon rate, and semi-annual payments. Calculate the present value if the bond if the YTM is 7%. 1. How would the answer to #1 change if the YTM is 9%? 2. How would the answer to #1 change if the YTM is 5%? 3. What bond relationship are Problems 1-3 discussing? 1. ABC issued 12-year bonds at a coupon rate of 8% with semi-annual payments. If the bond currently sells for $1050 of par value, what is the YTM? 2. ABC issued 12-year bonds 2 years ago at a coupon rate of 8% with semi-annual payments. If the bond currently sells for 105% of par value, what is the YTM? 3. A bond has a quoted price of $1,080.42. It has a face value of $1000, a semi-annual coupon of $30, and a maturity of five years. What is the current yield? What is the yield to maturity? 4. The 6 percent annual coupon bonds of Greentree, Inc. are selling for $1,020, have a face value of $1,000, and have a yield to maturity of 5.43 percent. How many years will it be until these bonds mature? 5. A 7 percent semi-annual coupon bond is priced at $1,028.33. The bond has a $1,000 face value and a yield to maturity of 6.49 percent. How many years will it be until this bond matures? 1. ABC has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature in 10 years, and have a 7.5 percent coupon. The current price is quoted at 99.59 percent of par value. What is the yield to maturity? What is the current yield? 2. Refer to #1 above. Suppose the bonds are callable in 5 years at 105 percent of par value, what is the yield-to-call? 3. ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 12 years. What is the yield to maturity? What is the current yield? 4. Refer to #3 above. Suppose the bonds are callable in 5 years at 110 percent of par value, what is the yield-to-call? QUESTION 1 1. You paid $832 for a corporate bond that has a 5.51% coupon rate. What is the current yield? Hint: if nothing is mentioned, then assume par value = $1,000 Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. 1 points QUESTION 2 1. The yield to maturity on a Marshall Co. premium bond is 7.6 percent. This is the: nominal rate. effective rate. real rate. current yield. coupon rate.
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