4 a problem 1for a bond selling for $921, with a par value of $1,000

1. 4AProblem 1For a bond selling for $921, with a par value of
$1,000 and a coupon rate of 7.45 percent, the current yield is
_____.Step 1: Calculate annual coupon payments = $1000
*7.45% = $74.5074.50Step 2: Calculate current yield = $74.50 /
$921 = 8.09%8.09%Problem 2You paid $1,189 for a corporate
bond that has a 8.76 percent coupon rate. What is the bond’s
current yield?Step 1: Calculate annual coupon payments =
$1000 *8.76% = $87.6087.60Step 2: Calculate current yield =
$87.60 / $1189 = 7.37%7.37%Problem 3A $1,000 par value
bond with a 9.12 percent coupon rate, currently selling for
$977, has a current yield of _____.Step 1: Calculate annual
coupon payments = $1000 *9.12% = $91.2091.20Step 2:
Calculate current yield = $91.20 / $977 = 9.33%9.33%
4BProblem 1What is the value of a bond that has a par value of
$1,000, a coupon rate of 9.82 percent (paid annually), and that
matures in 14 years? Assume a required rate of return on this
bond is 12.76 percent.Market iCoupon
iNperPMTFVType0.12760.09821498.201,000.000=PV(12.76%,1
4,98.2,1000,0) = $812.48($812.48)Problem 2Fresh Water, Inc.
sold an issue of 23-year $1,000 par value bonds to the public.
The bonds have a 9.56 percent coupon rate and pay interest
annually. The current market rate of interest on the Fresh
Water, Inc. bonds is 8.13 percent. What is the current market
price of the bonds?Market iCoupon
iNperPMTFVType0.08130.09562395.601,000.000Coupon
Pmt95.60($1,146.75)
4CProblem 1General Mills has a $1,000 par value, 25-year to
maturity bond outstanding with an annual coupon rate of 8.56
percent per year, paid semiannually. Market interest rates on
similar bonds are 12.16 percent. Calculate the bond’s price
today.Market iCoupon
iNperPMTFVType0.12160.08562542.801,000.000=PV(12.16%/2
,25*2,85.6/2,1000,0) = 719.42($719.42)Problem 2Pet Food
Company bonds pay an annual coupon rate of 12.77 percent.

2. Coupon payments are paid semiannually. Bonds have 5 years to
maturity and par value of $1,000. Compute the value of Pet
Food Company bonds if the market interest rate on this type of
bond is 9.44 percent.Market iCoupon
iNperPMTFVType0.09440.12775127.701,000.000=PV(9.44%/2,
5*2,127.7/2,1000,0) = 1,130.33($1,130.33)Problem 3Flower
Valley Company bonds have a 14.29 percent coupon rate.
Interest is paid semiannually. The bonds have a par value of
$1,000 and will mature 29 years from now. Compute the value
of Flower Valley Company bonds if investors’ required rate of
return is 9.03 percent.Market iCoupon
iNperPMTFVType0.09030.142929142.901,000.000=PV(9.03%/2
,29*2,142.9/2,1000,0) = 1,537.53 ($1,537.53)
4DProblem 1What is the yield to maturity of a 22-year bond
that pays a coupon rate of 11.65 percent per year, has a $1,000
par value, and is currently priced at $1,214? Assume annual
coupon payments.Market iCoupon
iNperPMTFVTypePV0.116522116.501,000.0001,214.00=RATE(
22,116.5,-1214,1000,0) = 9.33%9.33%Problem 2Blue Crab, Inc.
plans to issue new bonds, but is uncertain how the market would
set the yield to maturity. The bonds would be 27-year to
maturity, carry a 13.94 percent annual coupon, and have a
$1,000 par value. Blue Crab, Inc. has determined that these
bonds would sell for $1,190 each. What is the yield to maturity
for these bonds?Market iCoupon
iNperPMTFVTypePV0.139427139.401,000.0001,190.00=RATE(
27,139.4,-1190,1000,0) = 11.61%11.61%Problem 3Fresh Fruit,
Inc. has a $1,000 par value bond that is currently selling for
$1,031. It has an annual coupon rate of 6.44 percent, paid
semiannually, and has 22-years remaining until maturity. What
would the annual yield to maturity be on the bond if you
purchased the bond today and held it until maturity?Market
iCoupon
iNperPMTFVTypePV0.06442264.401,000.0001,031.00=RATE(2
2*2,64.4/2,-1031,1000,0)*2 = 6.18%6.18%Problem 4A few
years ago, Spider Web, Inc. issued bonds with a 7.79 percent

3. annual coupon rate, paid semiannually. The bonds have a par
value of $1,000, a current price of $864, and will mature in 16
years. What would the annual yield to maturity be on the bond
if you purchased the bond today?Market iCoupon
iNperPMTFVTypePV0.07791677.901,000.000864.00=RATE(16
*2,77.9/2,-864,1000,0)*2 = 9.46%9.46%
4EProblem 1Marco Chip, Inc. just issued zero-coupon bonds
with a par value of $1,000. The bond has a maturity of 19 years
and a yield to maturity of 11.63 percent, compounded semi -
annually. What is the current price of the bond?Market iCoupon
iNperPMTFVTypePVYTM191,000.000.1163=PV(11.63%/2,19*
2,0,1000,0) = 116.74($116.74)Problem 2Black Water Corp. just
issued zero-coupon bonds with a par value of $1,000. The bond
has a maturity of 30 years and a yield to maturity of 6.49
percent, compounded annually. What is the current price of the
bond?Market iCoupon
iNperPMTFVTypePVYTM301,000.000.0649=PV(6.49%,30,0,10
00,0) = 151.61($151.61)Problem 310 years ago, Mini Max Inc.
issued 30 year to maturity zero-coupon bonds with a par value
of $1,000. Now the bond has a yield to maturity of 8.63 percent,
compounded semi-annually. What is the current price of the
bond?Market iCoupon iNperPMTFVTypePVYTM20-
01,000.000.0863=PV(8.63%/2,20*2,0,1000,0) =
184.56($184.56)Problem 415 years ago, Blue Lake Corp. issued
30 year to maturity zero-coupon bonds with a par value of
$5,000. The bond has current yield to maturity of 5.83 percent,
compounded annually. What is the current price of the
bond?Market iCoupon iNperPMTFVType PVYTM15-
05,000.000.0583=PV(5.83%,15,0,5000,0) = 2,137.17($2,137.17)
4FProblem 1What is the yield to call of a 30-year to maturity
bond that pays a coupon rate of 6.47 percent per year, has a
$1,000 par value, and is currently priced at $1,031? The bond
can be called back in 8 years at a call price $1,081. Assume
annual coupon payments.Market iCoupon
iNperPMTFVTypePVYTM0.0647864.701,081.001,031.00=RAT
E(8,64.7,-1031,1081,0) = 6.75% 6.75%Problem 2Bright Sun,

4. Inc. sold an issue of 30-year $1,000 par value bonds to the
public. The bonds had a 14.14 percent coupon rate and paid
interest annually. It is now 5 years later. The current market
rate of interest on the Bright Sun bonds is 8.71 percent. What is
the current market price (intrinsic value) of the bonds?Mar ket
iCoupon
iNperPMTFVTypePVYTM0.08710.141425141.401,000.000???=
PV(8.71%,25,141.4,1000,0)= $1,546.15 ($1,546.15)Problem 323
years ago, Delicious Mills, Inc. issued 30-year to maturity
bonds that had a 10.23 percent annual coupon rate, paid
semiannually. The bonds had a $1,000 face value. Since then,
interest rates in general have changed and the yield to maturity
on the Delicious Mills bonds is now 10.38 percent. Given this
information, what is the price today for a Delicious Mills
bond?Market iCoupon
iNperPMTFVTypePVYTM0.10380.10237102.301,000.000???=P
V(10.38%/2,7*2,102.3/2,1000,0) = 992.67($992.67)Problem
4Dan is considering the purchase of Super Technology, Inc.
bonds that were issued 9 years ago. When the bonds were
originally sold they had a 26-year maturity and a 9.01 percent
coupon interest rate, paid annually. The bond is currently
selling for $809. What is the yield to maturity on the bonds if
you purchased the bond today?Market iCoupon
iNperPMTFVTypePVYTM0.09011790.101,000.000809.00=RAT
E(17,90.1,-809,1000,0) = 11.64%11.64%
4GProblem 1Assume that today's date is February 15, 2015.
Robin Hood Inc. bond is an annual-coupon bond. Par value of
the bond is $1,000. How much you will pay for the bond if you
purchased the bond today?CompanyMaturity DateCurre nt
YieldPriceCoupon RateYTMRatingRobin Hood112.5996.0562-
15- 2037--DThe number in the second column (112.599) is the
price per each $100 of par value. Par value of the bond is
$1000, so the price of the bond in dollars is($1000/100) *
112.599 = 10* 112.599 = $1,125.991125.99Problem 2Assume
that today's date is February 15, 2015. Robin Hood Inc. bond is
an annual-coupon bond. Par value of the bond is $1,000.

5. Calculate annual coupon interest payments. CompanyMaturity
DateCurrent YieldPriceCoupon RateYTMRatingRobin
Hood127.49510.1232-15- 2026--DCoupon rate is 10.123%Par
value of the bond is $1000Coupon payment = $1000*10.123% =
$101.2310,123.00Problem 3Assume that today's date is
February 15, 2015. Robin Hood Inc. bond is an annual-coupon
bond. Par value of the bond is $1,000. Calculate the bond's
current yield.CompanyMaturity DateCurrent YieldPriceCoupon
RateYTMRatingRobin Hood121.8198.1752-15- 2039-
?D0.0671Problem 4Assume that today's date is April 15, 2015.
Fresh Bakery Inc. bond is an annual-coupon bond. Par value of
the bond is $5,000.How much you will pay for the bond if you
purchased the bond today?CompanyMaturity DateCurrent
YieldPriceCoupon RateYTMRatingFresh Bakery92.1488.43304-
15- 2027--AA4,607.40($5000/100) * 92.148 = 50* 92.148 =
$4,607.40Problem 5Assume that today's date is April 15, 2015.
Fresh Bakery Inc. bond is an annual-coupon bond. Par value of
the bond is $5,000.Calculate annual coupon interest payments.
CompanyMaturity DateCurrent YieldPriceCoupon
RateYTMRatingFresh Bakery94.2629.39904-15- 2028--
AA469.95Problem 6Assume that today's date is April 15, 2015.
Fresh Bakery Inc. bond is an annual-coupon bond. Par value of
the bond is $5,000. Calculate the bond's current
yield.CompanyMaturity DateCurrent YieldPriceCoupon
RateYTMRatingFresh Bakery101.18911.42404-15- 2021-
?AACoupon Pmt = 571.2Yield = 0.11290