1. Bond. What is the value of a $1,000 par value bond withannual payments of an

ID: 2662580 • Letter: 1

Question

a. 11% coupon with a maturity of 20 years and a 15% requiredreturn?

b. 12% coupon with a maturity of 10 years and a 7% requiredreturn?

c. 8% semiannual coupon with a maturity of 10 years and a 11%required return?

d. 8% semiannual coupon with a maturity of 20 years and a 6%required return?

2. Bond. What is the yield to maturity of a $1000 par value bondwith an

a. 10% semiannual coupon and 20 years to maturity and a $1,000price?

b. 6.5% semiannual coupon and 13 years to maturity and a $890price?

c. 7.5% annual coupon and 19 years to maturity and a $788price?

d. 4.5% annual coupon and 7 years to maturity and a $800price?

Note: All of my answers use the HP 10bII FinancialCalculator.

Tip: Make sure the calculator is set to END mode, (if it is setto BEG mode it will say BEGIN at the bottom of the display)

d. N = 40, I/YR = 6, PV = solve for, PMT = 1,000(.08)/2 = 40, FV= 1,000 Also make sure P/YR is set to 2

PV = $1,231.15

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