Bonds and bond valuation | Business & Finance homework help

10. Coupon rates. What are the coupon rates for the bonds listed below?

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Par Value

Coupon Rate

Years to Maturity

Yield to Maturity

 

Price

Coupon

Frequency

$1,000.00

?

30

6.0%

$1,412.94

Annual

$1,000.00

?

25

10.0%

$1,182.56

Semi-Annual

$1,000.00

?

20

9.0%

$907.63

Quarterly

$1,000.00

?

10

8.0%

$862.63

Monthly

11. Bond prices and maturity dates. Moore Company is about to issue a bond with semi-annual coupon payments, a coupon rate of 8%, and par value of $1,000. The yield-to-maturity for this bond is 10%.

a.   What is the price of the bond if the bond matures in five, ten, fifteen, or twenty years?

b.   What do you notice about the price of the bond in relationship to the maturity of the bond?

13. Zero-coupon bond. Addison Company will issue a zero coupon bond this coming month. The projected yield for the bond is 7%. If the par value of the bond is $1,000, what is the price of the bond using a semiannual convention if

a.   The maturity is 20 years?

b.   The maturity is 30 years?

c.   The maturity is 50 years?

d.   The maturity is 100 years?

Zero-coupon bond. What is the annual implied interest of a five-year zero-coupon bond (using the semiannual pricing convention) with a current yield of 12% and a par value of $1,000.00?

Callable bond. McCarty Manufacturing Company makes baseball equipment. The company decides to issue a callable bond that it expects to sell for $840 per bond. If the bond is a twenty-year semiannual bond with a 6% coupon rate and a current yield to maturity of 7%, what is the cost of the option attached to the bond? (Assume $1000 par value). Hint: find the price of an equivalent bond without the call option.

What is the price in dollars of the February 2000 Treasury note if its par value is $100,000? Verify the current yield of this note.

What is the yield to maturity of the August 2005 Treasury bond? Compare the yield to maturity and the current yield. How do you explain this relationship?

What is the price of the August 2003 Treasury bond (assume a $100,000 par value) with the yield to maturity from the table? Verify the current yield. Why is the current yield higher than the yield to maturity?

What pattern do you see in the yield-to-maturity of these Treasury notes and bonds?

What is the price for the April 30 Treasury bill?

 

Determine the bank discount rate of the August 30Treasury billif it is currently selling for $9,841.625. What is the bond equivalent yield? 

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