1- Bond Valuation and Yield A bond has a par value of $1,000, pays $50 semiannually and has a maturity of 10 years. If the bond earns 12% per year, what is the price of the bond? Rate Nper PMT FV Type PV What is the yield to maturity for the bond? Nper PMT PV FV Type Rate What would be the bond's price if the rate earned declined to 8% per year? Rate Nper PMT FV Type PV If the maturity period is reduced to 5 years and the required rate of return is 8%, what would be the price of the bond? Rate Nper PMT FV Type PV What is the yield to maturity for the bond when the maturity is 5 years and the required rate of return is 8%? Nper PMT PV FV Type Rate What generalizations about bond prices, interest rates and maturity periods can be made based on the calculations made above? 2- Callable Bonds The following bonds have a par value of $1,000 and the required rate of return is 10%. Bond XY: 5¼ percent coupon, with interest paid annually for 20 years Bond AB: 14 percent coupon, with interest paid annually for 20 years What is each bond's current market price? Bond XY Bond AB Rate Nper PMT FV Type PV If current interest rates are 9%, which bond would you expect to be called? Explain. .

1. 1-
Bond Valuation and Yield
A bond has a par value of $1,000, pays $50 semiannually and
has a maturity of 10 years.

2. If the bond earns 12% per year, what is the price of the bond?

3. Rate
Nper

4. PMT
FV
Type

5. PV

6. What is the yield to maturity for the bond?

7. Nper
PMT
PV

8. FV
Type

9. Rate

10. What would be the bond's price if the rate earned declined to
8% per year?
Rate

11. Nper
PMT

12. FV
Type
PV

14. If the maturity period is reduced to 5 years and the required rate
of return is 8%, what would be the price of the bond?
Rate
Nper

15. PMT
FV

16. Type
PV

17. What is the yield to maturity for the bond when the maturity is
5 years and the required rate of return is 8%?

18. Nper
PMT
PV

19. FV
Type

20. Rate

21. What generalizations about bond prices, interest rates and
maturity periods can be made based on the calculations made
above?
2-
Callable Bonds

22. The following bonds have a par value of $1,000 and the
required rate of return is 10%.
Bond XY: 5¼ percent coupon, with interest paid annually for 20
years
Bond AB: 14 percent coupon, with interest paid annually for 20
years

23. What is each bond's current market price?
Bond XY
Bond AB
Rate

24. Nper
PMT
FV
Type

25. PV
If current interest rates are 9%, which bond would you expect to
be called? Explain.